Correlation Between Old Point and Independent Bank
Can any of the company-specific risk be diversified away by investing in both Old Point and Independent Bank 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 Independent Bank 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 Independent Bank, you can compare the effects of market volatilities on Old Point and Independent Bank 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 Independent Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Point and Independent Bank.
Diversification Opportunities for Old Point and Independent Bank
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Independent is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Old Point Financial and Independent Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independent Bank 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 Independent Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independent Bank has no effect on the direction of Old Point i.e., Old Point and Independent Bank go up and down completely randomly.
Pair Corralation between Old Point and Independent Bank
Given the investment horizon of 90 days Old Point is expected to generate 1.01 times less return on investment than Independent Bank. But when comparing it to its historical volatility, Old Point Financial is 1.05 times less risky than Independent Bank. It trades about 0.06 of its potential returns per unit of risk. Independent Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,192 in Independent Bank on September 12, 2024 and sell it today you would earn a total of 2,015 from holding Independent Bank or generate 38.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.79% |
| Values | Daily Returns |
Old Point Financial vs. Independent Bank
Performance |
| Timeline |
| Old Point Financial |
| Independent Bank |
Old Point and Independent Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Point and Independent Bank
The main advantage of trading using opposite Old Point and Independent Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Point position performs unexpectedly, Independent Bank 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 Independent Bank will offset losses from the drop in Independent Bank'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 |
| Independent Bank vs. Capitol Federal Financial | Independent Bank vs. BankFinancial | Independent Bank vs. Business First Bancshares | Independent Bank vs. First Bancorp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |