Correlation Between Old Point and HV Bancorp

Can any of the company-specific risk be diversified away by investing in both Old Point and HV 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 HV 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 HV Bancorp, you can compare the effects of market volatilities on Old Point and HV 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 HV Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Point and HV Bancorp.

Diversification Opportunities for Old Point and HV Bancorp

0.41

Correlation Coefficient

Old Point  HV Bancorp

Very weak diversification

The 3 months correlation between Old and HVBC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Old Point Financial and HV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HV 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 HV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HV Bancorp has no effect on the direction of Old Point i.e., Old Point and HV Bancorp go up and down completely randomly.

Pair Corralation between Old Point and HV Bancorp

If you would invest  1,867  in Old Point Financial on August 31, 2024 and sell it today you would earn a total of  385.00  from holding Old Point Financial or generate 20.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Old Point Financial  vs.  HV Bancorp

Old Point Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Point Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Old Point reported solid returns over the last few months and may actually be approaching a breakup point.

HV Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HV Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, HV Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Old Point and HV Bancorp

The main advantage of trading using opposite Old Point and HV Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Point position performs unexpectedly, HV 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 HV Bancorp will offset losses from the drop in HV Bancorp's long position.

The idea behind Old Point Financial and HV Bancorp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.