Correlation Between Lakeland Financial and NBT Bancorp
Can any of the company-specific risk be diversified away by investing in both Lakeland Financial 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 Lakeland Financial and NBT Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakeland Financial and NBT Bancorp, you can compare the effects of market volatilities on Lakeland Financial 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 Lakeland Financial with a short position of NBT Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Financial and NBT Bancorp.
Diversification Opportunities for Lakeland Financial and NBT Bancorp
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lakeland and NBT is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Financial and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Bancorp and Lakeland 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 Lakeland Financial 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 Lakeland Financial i.e., Lakeland Financial and NBT Bancorp go up and down completely randomly.
Pair Corralation between Lakeland Financial and NBT Bancorp
Given the investment horizon of 90 days Lakeland Financial is expected to generate 2.22 times less return on investment than NBT Bancorp. In addition to that, Lakeland Financial is 1.04 times more volatile than NBT Bancorp. It trades about 0.01 of its total potential returns per unit of risk. NBT Bancorp is currently generating about 0.03 per unit of volatility. If you would invest 4,001 in NBT Bancorp on September 2, 2024 and sell it today you would earn a total of 1,011 from holding NBT Bancorp or generate 25.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lakeland Financial vs. NBT Bancorp
Performance |
| Timeline |
| Lakeland Financial |
| NBT Bancorp |
Lakeland Financial and NBT Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakeland Financial and NBT Bancorp
The main advantage of trading using opposite Lakeland Financial and NBT Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Financial 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.| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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