Correlation Between Old Point and Parke Bancorp
Can any of the company-specific risk be diversified away by investing in both Old Point and Parke 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 Parke 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 Parke Bancorp, you can compare the effects of market volatilities on Old Point and Parke 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 Parke Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Point and Parke Bancorp.
Diversification Opportunities for Old Point and Parke Bancorp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Parke is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Old Point Financial and Parke Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parke 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 Parke Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parke Bancorp has no effect on the direction of Old Point i.e., Old Point and Parke Bancorp go up and down completely randomly.
Pair Corralation between Old Point and Parke Bancorp
Given the investment horizon of 90 days Old Point is expected to generate 1.54 times less return on investment than Parke Bancorp. In addition to that, Old Point is 1.23 times more volatile than Parke Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Parke Bancorp is currently generating about 0.03 per unit of volatility. If you would invest 1,936 in Parke Bancorp on August 27, 2024 and sell it today you would earn a total of 419.00 from holding Parke Bancorp or generate 21.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Old Point Financial vs. Parke Bancorp
Performance |
| Timeline |
| Old Point Financial |
| Parke Bancorp |
Old Point and Parke Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Point and Parke Bancorp
The main advantage of trading using opposite Old Point and Parke Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Point position performs unexpectedly, Parke 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 Parke Bancorp will offset losses from the drop in Parke 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 |
| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West Bancshares |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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