Correlation Between NBT Bancorp and Village Bank
Can any of the company-specific risk be diversified away by investing in both NBT Bancorp and Village Bank 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 Village Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBT Bancorp and Village Bank and, you can compare the effects of market volatilities on NBT Bancorp and Village Bank 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 Village Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBT Bancorp and Village Bank.
Diversification Opportunities for NBT Bancorp and Village Bank
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NBT and Village is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding NBT Bancorp and Village Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Bank 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 Village Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Bank has no effect on the direction of NBT Bancorp i.e., NBT Bancorp and Village Bank go up and down completely randomly.
Pair Corralation between NBT Bancorp and Village Bank
Given the investment horizon of 90 days NBT Bancorp is expected to generate 275.49 times less return on investment than Village Bank. But when comparing it to its historical volatility, NBT Bancorp is 63.96 times less risky than Village Bank. It trades about 0.03 of its potential returns per unit of risk. Village Bank and is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,832 in Village Bank and on August 29, 2024 and sell it today you would earn a total of 2,958 from holding Village Bank and or generate 61.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
NBT Bancorp vs. Village Bank and
Performance |
| Timeline |
| NBT Bancorp |
| Village Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
NBT Bancorp and Village Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBT Bancorp and Village Bank
The main advantage of trading using opposite NBT Bancorp and Village Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBT Bancorp position performs unexpectedly, Village Bank 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 Village Bank will offset losses from the drop in Village Bank's 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 |
| Village Bank vs. Home Federal Bancorp | Village Bank vs. First Northwest Bancorp | Village Bank vs. First Financial Northwest | Village Bank vs. CF Bankshares |
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 Stocks Directory module to find actively traded stocks across global markets.
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