Correlation Between 1st Source and Rhinebeck Bancorp
Can any of the company-specific risk be diversified away by investing in both 1st Source and Rhinebeck 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 1st Source and Rhinebeck Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Source and Rhinebeck Bancorp, you can compare the effects of market volatilities on 1st Source and Rhinebeck 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 1st Source with a short position of Rhinebeck Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Source and Rhinebeck Bancorp.
Diversification Opportunities for 1st Source and Rhinebeck Bancorp
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 1st and Rhinebeck is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding 1st Source and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp and 1st Source 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 1st Source are associated (or correlated) with Rhinebeck Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rhinebeck Bancorp has no effect on the direction of 1st Source i.e., 1st Source and Rhinebeck Bancorp go up and down completely randomly.
Pair Corralation between 1st Source and Rhinebeck Bancorp
Given the investment horizon of 90 days 1st Source is expected to generate 3.23 times more return on investment than Rhinebeck Bancorp. However, 1st Source is 3.23 times more volatile than Rhinebeck Bancorp. It trades about 0.17 of its potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.44 per unit of risk. If you would invest 5,887 in 1st Source on September 1, 2024 and sell it today you would earn a total of 602.00 from holding 1st Source or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
1st Source vs. Rhinebeck Bancorp
Performance |
| Timeline |
| 1st Source |
| Rhinebeck Bancorp |
1st Source and Rhinebeck Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Source and Rhinebeck Bancorp
The main advantage of trading using opposite 1st Source and Rhinebeck Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Source position performs unexpectedly, Rhinebeck 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 Rhinebeck Bancorp will offset losses from the drop in Rhinebeck Bancorp's long position.| 1st Source vs. Penns Woods Bancorp | 1st Source vs. Great Southern Bancorp | 1st Source vs. Waterstone Financial | 1st Source vs. Chemung Financial Corp |
| Rhinebeck Bancorp vs. Home Federal Bancorp | Rhinebeck Bancorp vs. Community West Bancshares | Rhinebeck Bancorp vs. Magyar Bancorp | Rhinebeck Bancorp vs. First Financial Northwest |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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