Correlation Between First Bancorp and Old Point
Can any of the company-specific risk be diversified away by investing in both First Bancorp and Old Point 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 First Bancorp and Old Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancorp and Old Point Financial, you can compare the effects of market volatilities on First Bancorp and Old Point 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 First Bancorp with a short position of Old Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and Old Point.
Diversification Opportunities for First Bancorp and Old Point
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Old is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and Old Point Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Point Financial and First Bancorp 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 First Bancorp are associated (or correlated) with Old Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Point Financial has no effect on the direction of First Bancorp i.e., First Bancorp and Old Point go up and down completely randomly.
Pair Corralation between First Bancorp and Old Point
Given the investment horizon of 90 days First Bancorp is expected to under-perform the Old Point. But the stock apears to be less risky and, when comparing its historical volatility, First Bancorp is 1.34 times less risky than Old Point. The stock trades about -0.15 of its potential returns per unit of risk. The Old Point Financial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,168 in Old Point Financial on September 24, 2024 and sell it today you would earn a total of 320.00 from holding Old Point Financial or generate 14.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Bancorp vs. Old Point Financial
Performance |
Timeline |
First Bancorp |
Old Point Financial |
First Bancorp and Old Point Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Bancorp and Old Point
The main advantage of trading using opposite First Bancorp and Old Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, Old Point 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 Old Point will offset losses from the drop in Old Point's long position.First Bancorp vs. Home Federal Bancorp | First Bancorp vs. First Northwest Bancorp | First Bancorp vs. HomeTrust Bancshares | First Bancorp vs. Lake Shore Bancorp |
Old Point vs. Home Federal Bancorp | Old Point vs. First Northwest Bancorp | Old Point vs. HomeTrust Bancshares | Old Point vs. Lake Shore 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
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 |