Correlation Between Colony Bankcorp and Old Point

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

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

Diversification Opportunities for Colony Bankcorp and Old Point

0.75

Correlation Coefficient

Colony Bankcorp  Old Point

Poor diversification

The 3 months correlation between Colony and Old is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp 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 Colony Bankcorp 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 Colony Bankcorp 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 Colony Bankcorp i.e., Colony Bankcorp and Old Point go up and down completely randomly.

Pair Corralation between Colony Bankcorp and Old Point

Given the investment horizon of 90 days Colony Bankcorp is expected to generate 1.83 times more return on investment than Old Point. However, Colony Bankcorp is 1.83 times more volatile than Old Point Financial. It trades about 0.05 of its potential returns per unit of risk. Old Point Financial is currently generating about 0.03 per unit of risk. If you would invest  1,550  in Colony Bankcorp on May 6, 2025 and sell it today you would earn a total of  77.00  from holding Colony Bankcorp or generate 4.97% return on investment over 90 days.

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

Colony Bankcorp  vs.  Old Point Financial

Colony Bankcorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Colony Bankcorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Colony Bankcorp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Old Point Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Point Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Old Point is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Colony Bankcorp and Old Point

The main advantage of trading using opposite Colony Bankcorp and Old Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp 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 Colony Bankcorp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.