Correlation Between Old Point and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both Old Point and Home Bancorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Old Point and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Point Financial and Home Bancorp, you can compare the effects of market volatilities on Old Point and Home Bancorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Old Point with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Point and Home Bancorp.
Diversification Opportunities for Old Point and Home Bancorp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Home is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Old Point Financial and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and Old Point is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Old Point Financial are associated (or correlated) with Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of Old Point i.e., Old Point and Home Bancorp go up and down completely randomly.
Pair Corralation between Old Point and Home Bancorp
Given the investment horizon of 90 days Old Point Financial is expected to generate 1.52 times more return on investment than Home Bancorp. However, Old Point is 1.52 times more volatile than Home Bancorp. It trades about 0.31 of its potential returns per unit of risk. Home Bancorp is currently generating about 0.2 per unit of risk. If you would invest 2,510 in Old Point Financial on November 18, 2024 and sell it today you would earn a total of 440.00 from holding Old Point Financial or generate 17.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Point Financial vs. Home Bancorp
Performance |
| Timeline |
| Old Point Financial |
| Home Bancorp |
Old Point and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Point and Home Bancorp
The main advantage of trading using opposite Old Point and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Point position performs unexpectedly, Home Bancorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Home Bancorp will offset losses from the drop in Home Bancorp's long position.| Old Point vs. First Community | Old Point vs. Oak Valley Bancorp | Old Point vs. Chemung Financial Corp | Old Point vs. Home Bancorp |
| Home Bancorp vs. Home Federal Bancorp | Home Bancorp vs. Community West Bancshares | Home Bancorp vs. First Financial Northwest | Home Bancorp vs. First Capital |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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