Correlation Between Prime Meridian and Pathfinder Bancorp

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Can any of the company-specific risk be diversified away by investing in both Prime Meridian and Pathfinder 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 Prime Meridian and Pathfinder Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Meridian Holding and Pathfinder Bancorp, you can compare the effects of market volatilities on Prime Meridian and Pathfinder 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 Prime Meridian with a short position of Pathfinder Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Meridian and Pathfinder Bancorp.

Diversification Opportunities for Prime Meridian and Pathfinder Bancorp

PrimePathfinderDiversified AwayPrimePathfinderDiversified Away100%
0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Prime and Pathfinder is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Holding and Pathfinder Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pathfinder Bancorp and Prime Meridian 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 Prime Meridian Holding are associated (or correlated) with Pathfinder Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pathfinder Bancorp has no effect on the direction of Prime Meridian i.e., Prime Meridian and Pathfinder Bancorp go up and down completely randomly.

Pair Corralation between Prime Meridian and Pathfinder Bancorp

Given the investment horizon of 90 days Prime Meridian Holding is expected to generate 1.59 times more return on investment than Pathfinder Bancorp. However, Prime Meridian is 1.59 times more volatile than Pathfinder Bancorp. It trades about 0.12 of its potential returns per unit of risk. Pathfinder Bancorp is currently generating about 0.18 per unit of risk. If you would invest  2,704  in Prime Meridian Holding on November 27, 2024 and sell it today you would earn a total of  126.00  from holding Prime Meridian Holding or generate 4.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Prime Meridian Holding  vs.  Pathfinder Bancorp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50510
JavaScript chart by amCharts 3.21.15PMHG PBHC
       Timeline  
Prime Meridian Holding 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Prime Meridian Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Prime Meridian is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb262728293031
Pathfinder Bancorp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Pathfinder Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Pathfinder Bancorp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb15.51616.51717.51818.5

Prime Meridian and Pathfinder Bancorp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.03-5.27-3.5-1.740.01.733.535.327.118.91 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15PMHG PBHC
       Returns  

Pair Trading with Prime Meridian and Pathfinder Bancorp

The main advantage of trading using opposite Prime Meridian and Pathfinder Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Meridian position performs unexpectedly, Pathfinder 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 Pathfinder Bancorp will offset losses from the drop in Pathfinder Bancorp's long position.
The idea behind Prime Meridian Holding and Pathfinder Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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