Correlation Between Amalgamated Bank and Old Point

Can any of the company-specific risk be diversified away by investing in both Amalgamated Bank 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 Amalgamated Bank and Old Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amalgamated Bank and Old Point Financial, you can compare the effects of market volatilities on Amalgamated Bank 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 Amalgamated Bank with a short position of Old Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amalgamated Bank and Old Point.

Diversification Opportunities for Amalgamated Bank and Old Point

-0.43

Correlation Coefficient

Amalgamated Bank  Old Point

Very good diversification

The 3 months correlation between Amalgamated and Old is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Amalgamated Bank 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 Amalgamated Bank 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 Amalgamated Bank 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 Amalgamated Bank i.e., Amalgamated Bank and Old Point go up and down completely randomly.

Pair Corralation between Amalgamated Bank and Old Point

Given the investment horizon of 90 days Amalgamated Bank is expected to generate 0.94 times more return on investment than Old Point. However, Amalgamated Bank is 1.07 times less risky than Old Point. It trades about 0.08 of its potential returns per unit of risk. Old Point Financial is currently generating about -0.09 per unit of risk. If you would invest  2,280  in Amalgamated Bank on March 19, 2024 and sell it today you would earn a total of  166.00  from holding Amalgamated Bank or generate 7.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Amalgamated Bank  vs.  Old Point Financial

Amalgamated Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amalgamated Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Amalgamated Bank may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Old Point Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Old Point Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Amalgamated Bank and Old Point

The main advantage of trading using opposite Amalgamated Bank and Old Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amalgamated Bank 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.

The idea behind Amalgamated Bank and Old Point Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.