Correlation Between Greene County and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both Greene County and Northeast 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 Greene County and Northeast Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greene County Bancorp and Northeast Bancorp, you can compare the effects of market volatilities on Greene County and Northeast 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 Greene County with a short position of Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greene County and Northeast Bancorp.
Diversification Opportunities for Greene County and Northeast Bancorp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Greene and Northeast is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Greene County Bancorp and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Bancorp and Greene County 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 Greene County Bancorp are associated (or correlated) with Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of Greene County i.e., Greene County and Northeast Bancorp go up and down completely randomly.
Pair Corralation between Greene County and Northeast Bancorp
Given the investment horizon of 90 days Greene County Bancorp is expected to under-perform the Northeast Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Greene County Bancorp is 1.01 times less risky than Northeast Bancorp. The stock trades about -0.04 of its potential returns per unit of risk. The Northeast Bancorp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 9,153 in Northeast Bancorp on November 3, 2024 and sell it today you would earn a total of 967.00 from holding Northeast Bancorp or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greene County Bancorp vs. Northeast Bancorp
Performance |
| Timeline |
| Greene County Bancorp |
| Northeast Bancorp |
Greene County and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greene County and Northeast Bancorp
The main advantage of trading using opposite Greene County and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greene County position performs unexpectedly, Northeast 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 Northeast Bancorp will offset losses from the drop in Northeast Bancorp's long position.| Greene County vs. Community West Bancshares | Greene County vs. First Northwest Bancorp | Greene County vs. Home Federal Bancorp | Greene County vs. First Financial Northwest |
| Northeast Bancorp vs. Home Federal Bancorp | Northeast Bancorp vs. Mainstreet Bank | Northeast Bancorp vs. Investar Holding Corp | Northeast Bancorp vs. Magyar Bancorp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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