Correlation Between Old Second and Peoples Bancorp
Can any of the company-specific risk be diversified away by investing in both Old Second and Peoples 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 Second and Peoples Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Second Bancorp and Peoples Bancorp, you can compare the effects of market volatilities on Old Second and Peoples 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 Second with a short position of Peoples Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Second and Peoples Bancorp.
Diversification Opportunities for Old Second and Peoples Bancorp
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and Peoples is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Old Second Bancorp and Peoples Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Bancorp and Old Second 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 Second Bancorp are associated (or correlated) with Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of Old Second i.e., Old Second and Peoples Bancorp go up and down completely randomly.
Pair Corralation between Old Second and Peoples Bancorp
Given the investment horizon of 90 days Old Second Bancorp is expected to generate 0.93 times more return on investment than Peoples Bancorp. However, Old Second Bancorp is 1.08 times less risky than Peoples Bancorp. It trades about 0.06 of its potential returns per unit of risk. Peoples Bancorp is currently generating about 0.05 per unit of risk. If you would invest 1,500 in Old Second Bancorp on August 29, 2024 and sell it today you would earn a total of 369.00 from holding Old Second Bancorp or generate 24.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Second Bancorp vs. Peoples Bancorp
Performance |
| Timeline |
| Old Second Bancorp |
| Peoples Bancorp |
Old Second and Peoples Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Second and Peoples Bancorp
The main advantage of trading using opposite Old Second and Peoples Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Second position performs unexpectedly, Peoples 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 Peoples Bancorp will offset losses from the drop in Peoples Bancorp's long position.| Old Second vs. Ohio Valley Banc | Old Second vs. Peoples Bancorp | Old Second vs. OceanFirst Financial Corp | Old Second vs. QCR Holdings |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |