Correlation Between Amalgamated Bank and Old Second

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

Diversification Opportunities for Amalgamated Bank and Old Second

0.86

Correlation Coefficient

Amalgamated Bank  Old Second

Very poor diversification

The 3 months correlation between Amalgamated and Old is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Amalgamated Bank and Old Second Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Second Bancorp 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 Second. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Second Bancorp has no effect on the direction of Amalgamated Bank i.e., Amalgamated Bank and Old Second go up and down completely randomly.

Pair Corralation between Amalgamated Bank and Old Second

Given the investment horizon of 90 days Amalgamated Bank is expected to generate 1.11 times more return on investment than Old Second. However, Amalgamated Bank is 1.11 times more volatile than Old Second Bancorp. It trades about 0.04 of its potential returns per unit of risk. Old Second Bancorp is currently generating about 0.03 per unit of risk. If you would invest  2,829  in Amalgamated Bank on September 2, 2025 and sell it today you would earn a total of  106.00  from holding Amalgamated Bank or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Amalgamated Bank  vs.  Old Second Bancorp

Amalgamated Bank

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Amalgamated Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Amalgamated Bank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Old Second Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Second Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Old Second is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Amalgamated Bank and Old Second

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

The idea behind Amalgamated Bank and Old Second 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.