Correlation Between Rhinebeck Bancorp and National Bank
Can any of the company-specific risk be diversified away by investing in both Rhinebeck Bancorp and National 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 Rhinebeck Bancorp and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rhinebeck Bancorp and National Bank Holdings, you can compare the effects of market volatilities on Rhinebeck Bancorp and National 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 Rhinebeck Bancorp with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rhinebeck Bancorp and National Bank.
Diversification Opportunities for Rhinebeck Bancorp and National Bank
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rhinebeck and National is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Rhinebeck Bancorp and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings and Rhinebeck 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 Rhinebeck Bancorp are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Rhinebeck Bancorp i.e., Rhinebeck Bancorp and National Bank go up and down completely randomly.
Pair Corralation between Rhinebeck Bancorp and National Bank
Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 1.83 times less return on investment than National Bank. But when comparing it to its historical volatility, Rhinebeck Bancorp is 1.03 times less risky than National Bank. It trades about 0.01 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,103 in National Bank Holdings on August 30, 2024 and sell it today you would earn a total of 742.00 from holding National Bank Holdings or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rhinebeck Bancorp vs. National Bank Holdings
Performance |
| Timeline |
| Rhinebeck Bancorp |
| National Bank Holdings |
Rhinebeck Bancorp and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rhinebeck Bancorp and National Bank
The main advantage of trading using opposite Rhinebeck Bancorp and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rhinebeck Bancorp position performs unexpectedly, National 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 National Bank will offset losses from the drop in National Bank's long position.| Rhinebeck Bancorp vs. Home Federal Bancorp | Rhinebeck Bancorp vs. Community West Bancshares | Rhinebeck Bancorp vs. Magyar Bancorp | Rhinebeck Bancorp vs. First Financial Northwest |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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