Correlation Between Old Point and Heritage Commerce
Can any of the company-specific risk be diversified away by investing in both Old Point and Heritage Commerce 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 Heritage Commerce 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 Heritage Commerce Corp, you can compare the effects of market volatilities on Old Point and Heritage Commerce 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 Heritage Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Point and Heritage Commerce.
Diversification Opportunities for Old Point and Heritage Commerce
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Heritage is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Old Point Financial and Heritage Commerce Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Commerce Corp 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 Heritage Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Commerce Corp has no effect on the direction of Old Point i.e., Old Point and Heritage Commerce go up and down completely randomly.
Pair Corralation between Old Point and Heritage Commerce
Given the investment horizon of 90 days Old Point Financial is expected to generate 0.79 times more return on investment than Heritage Commerce. However, Old Point Financial is 1.27 times less risky than Heritage Commerce. It trades about 0.06 of its potential returns per unit of risk. Heritage Commerce Corp is currently generating about -0.17 per unit of risk. If you would invest 2,485 in Old Point Financial on October 20, 2024 and sell it today you would earn a total of 25.00 from holding Old Point Financial or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Old Point Financial vs. Heritage Commerce Corp
Performance |
| Timeline |
| Old Point Financial |
| Heritage Commerce Corp |
Old Point and Heritage Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Point and Heritage Commerce
The main advantage of trading using opposite Old Point and Heritage Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Point position performs unexpectedly, Heritage Commerce 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 Heritage Commerce will offset losses from the drop in Heritage Commerce'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 |
| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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