Correlation Between Bankwell Financial and Rhinebeck Bancorp
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial 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 Bankwell Financial and Rhinebeck Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankwell Financial Group and Rhinebeck Bancorp, you can compare the effects of market volatilities on Bankwell Financial 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 Bankwell Financial with a short position of Rhinebeck Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and Rhinebeck Bancorp.
Diversification Opportunities for Bankwell Financial and Rhinebeck Bancorp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bankwell and Rhinebeck is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp and Bankwell Financial 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 Bankwell Financial Group 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 Bankwell Financial i.e., Bankwell Financial and Rhinebeck Bancorp go up and down completely randomly.
Pair Corralation between Bankwell Financial and Rhinebeck Bancorp
Given the investment horizon of 90 days Bankwell Financial Group is expected to generate 3.71 times more return on investment than Rhinebeck Bancorp. However, Bankwell Financial is 3.71 times more volatile than Rhinebeck Bancorp. It trades about 0.23 of its potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.44 per unit of risk. If you would invest 2,833 in Bankwell Financial Group on September 1, 2024 and sell it today you would earn a total of 482.00 from holding Bankwell Financial Group or generate 17.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bankwell Financial Group vs. Rhinebeck Bancorp
Performance |
| Timeline |
| Bankwell Financial |
| Rhinebeck Bancorp |
Bankwell Financial and Rhinebeck Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankwell Financial and Rhinebeck Bancorp
The main advantage of trading using opposite Bankwell Financial and Rhinebeck Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial 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.| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore Bancorp |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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