Correlation Between NBT Bancorp and Bridgewater Bancshares
Can any of the company-specific risk be diversified away by investing in both NBT Bancorp and Bridgewater Bancshares 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 NBT Bancorp and Bridgewater Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBT Bancorp and Bridgewater Bancshares Depositary, you can compare the effects of market volatilities on NBT Bancorp and Bridgewater Bancshares 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 NBT Bancorp with a short position of Bridgewater Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBT Bancorp and Bridgewater Bancshares.
Diversification Opportunities for NBT Bancorp and Bridgewater Bancshares
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NBT and Bridgewater is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding NBT Bancorp and Bridgewater Bancshares Deposit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgewater Bancshares and NBT Bancorp 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 NBT Bancorp are associated (or correlated) with Bridgewater Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgewater Bancshares has no effect on the direction of NBT Bancorp i.e., NBT Bancorp and Bridgewater Bancshares go up and down completely randomly.
Pair Corralation between NBT Bancorp and Bridgewater Bancshares
Given the investment horizon of 90 days NBT Bancorp is expected to under-perform the Bridgewater Bancshares. In addition to that, NBT Bancorp is 2.09 times more volatile than Bridgewater Bancshares Depositary. It trades about -0.06 of its total potential returns per unit of risk. Bridgewater Bancshares Depositary is currently generating about 0.11 per unit of volatility. If you would invest 1,899 in Bridgewater Bancshares Depositary on November 28, 2024 and sell it today you would earn a total of 38.00 from holding Bridgewater Bancshares Depositary or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBT Bancorp vs. Bridgewater Bancshares Deposit
Performance |
| Timeline |
| NBT Bancorp |
| Bridgewater Bancshares |
NBT Bancorp and Bridgewater Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBT Bancorp and Bridgewater Bancshares
The main advantage of trading using opposite NBT Bancorp and Bridgewater Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBT Bancorp position performs unexpectedly, Bridgewater Bancshares 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 Bridgewater Bancshares will offset losses from the drop in Bridgewater Bancshares' long position.| NBT Bancorp vs. Oak Valley Bancorp | NBT Bancorp vs. Home Federal Bancorp | NBT Bancorp vs. Finward Bancorp | NBT Bancorp vs. Community West Bancshares |
| Bridgewater Bancshares vs. CNB Financial | Bridgewater Bancshares vs. First Guaranty Bancshares | Bridgewater Bancshares vs. Dime Community Bancshares | Bridgewater Bancshares vs. Brighthouse Financial |
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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