Correlation Between Ames National and Rhinebeck Bancorp
Can any of the company-specific risk be diversified away by investing in both Ames National and Rhinebeck 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 Rhinebeck 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 Rhinebeck Bancorp, you can compare the effects of market volatilities on Ames National and Rhinebeck 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 Rhinebeck Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ames National and Rhinebeck Bancorp.
Diversification Opportunities for Ames National and Rhinebeck Bancorp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ames and Rhinebeck is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ames National and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck 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 Rhinebeck Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rhinebeck Bancorp has no effect on the direction of Ames National i.e., Ames National and Rhinebeck Bancorp go up and down completely randomly.
Pair Corralation between Ames National and Rhinebeck Bancorp
Given the investment horizon of 90 days Ames National is expected to generate 12.8 times less return on investment than Rhinebeck Bancorp. In addition to that, Ames National is 2.82 times more volatile than Rhinebeck Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.4 per unit of volatility. If you would invest 909.00 in Rhinebeck Bancorp on August 30, 2024 and sell it today you would earn a total of 72.00 from holding Rhinebeck Bancorp or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ames National vs. Rhinebeck Bancorp
Performance |
| Timeline |
| Ames National |
| Rhinebeck Bancorp |
Ames National and Rhinebeck Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ames National and Rhinebeck Bancorp
The main advantage of trading using opposite Ames National and Rhinebeck Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ames National position performs unexpectedly, Rhinebeck 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 Rhinebeck Bancorp will offset losses from the drop in Rhinebeck 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 |
| Rhinebeck Bancorp vs. Home Federal Bancorp | Rhinebeck Bancorp vs. Community West Bancshares | Rhinebeck Bancorp vs. Magyar Bancorp | Rhinebeck Bancorp vs. First Financial Northwest |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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