Correlation Between Valley National and NBT Bancorp
Can any of the company-specific risk be diversified away by investing in both Valley National and NBT 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 Valley National and NBT Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valley National Bancorp and NBT Bancorp, you can compare the effects of market volatilities on Valley National and NBT 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 Valley National with a short position of NBT Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valley National and NBT Bancorp.
Diversification Opportunities for Valley National and NBT Bancorp
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Valley and NBT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Valley National Bancorp and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Bancorp and Valley National 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 Valley National Bancorp are associated (or correlated) with NBT Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Bancorp has no effect on the direction of Valley National i.e., Valley National and NBT Bancorp go up and down completely randomly.
Pair Corralation between Valley National and NBT Bancorp
Considering the 90-day investment horizon Valley National Bancorp is expected to under-perform the NBT Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Valley National Bancorp is 1.13 times less risky than NBT Bancorp. The stock trades about -0.23 of its potential returns per unit of risk. The NBT Bancorp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 4,870 in NBT Bancorp on November 28, 2024 and sell it today you would lose (129.00) from holding NBT Bancorp or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valley National Bancorp vs. NBT Bancorp
Performance |
| Timeline |
| Valley National Bancorp |
| NBT Bancorp |
Valley National and NBT Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valley National and NBT Bancorp
The main advantage of trading using opposite Valley National and NBT Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valley National position performs unexpectedly, NBT 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 NBT Bancorp will offset losses from the drop in NBT Bancorp's long position.| Valley National vs. Fulton Financial | Valley National vs. Webster Financial | Valley National vs. United Bankshares | Valley National vs. FNB Corp |
| NBT Bancorp vs. Oak Valley Bancorp | NBT Bancorp vs. Home Federal Bancorp | NBT Bancorp vs. Finward Bancorp | NBT Bancorp vs. Community West Bancshares |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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