Correlation Between Ames National and NBT Bancorp
Can any of the company-specific risk be diversified away by investing in both Ames National and NBT 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 Ames National and NBT Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ames National and NBT Bancorp, you can compare the effects of market volatilities on Ames National and NBT 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 Ames National with a short position of NBT Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ames National and NBT Bancorp.
Diversification Opportunities for Ames National and NBT Bancorp
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ames and NBT is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ames National and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Bancorp and Ames National 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 Ames National are associated (or correlated) with NBT Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Bancorp has no effect on the direction of Ames National i.e., Ames National and NBT Bancorp go up and down completely randomly.
Pair Corralation between Ames National and NBT Bancorp
Given the investment horizon of 90 days Ames National is expected to generate 0.52 times more return on investment than NBT Bancorp. However, Ames National is 1.91 times less risky than NBT Bancorp. It trades about 0.15 of its potential returns per unit of risk. NBT Bancorp is currently generating about -0.06 per unit of risk. If you would invest 1,780 in Ames National on November 28, 2024 and sell it today you would earn a total of 52.00 from holding Ames National or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ames National vs. NBT Bancorp
Performance |
| Timeline |
| Ames National |
| NBT Bancorp |
Ames National and NBT Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ames National and NBT Bancorp
The main advantage of trading using opposite Ames National and NBT Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ames National position performs unexpectedly, NBT 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 NBT Bancorp will offset losses from the drop in NBT Bancorp's long position.| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung Financial Corp |
| NBT Bancorp vs. Oak Valley Bancorp | NBT Bancorp vs. Home Federal Bancorp | NBT Bancorp vs. Finward Bancorp | NBT Bancorp vs. Community West Bancshares |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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