Correlation Between Washington Federal and NBT Bancorp
Can any of the company-specific risk be diversified away by investing in both Washington Federal 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 Washington Federal and NBT Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and NBT Bancorp, you can compare the effects of market volatilities on Washington Federal 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 Washington Federal with a short position of NBT Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and NBT Bancorp.
Diversification Opportunities for Washington Federal and NBT Bancorp
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and NBT is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Bancorp and Washington Federal 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 Washington Federal 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 Washington Federal i.e., Washington Federal and NBT Bancorp go up and down completely randomly.
Pair Corralation between Washington Federal and NBT Bancorp
Given the investment horizon of 90 days Washington Federal is expected to generate 1.23 times less return on investment than NBT Bancorp. In addition to that, Washington Federal is 1.06 times more volatile than NBT Bancorp. It trades about 0.04 of its total potential returns per unit of risk. NBT Bancorp is currently generating about 0.06 per unit of volatility. If you would invest 3,506 in NBT Bancorp on August 31, 2024 and sell it today you would earn a total of 1,506 from holding NBT Bancorp or generate 42.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. NBT Bancorp
Performance |
| Timeline |
| Washington Federal |
| NBT Bancorp |
Washington Federal and NBT Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and NBT Bancorp
The main advantage of trading using opposite Washington Federal and NBT Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal 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.| Washington Federal vs. Finward Bancorp | Washington Federal vs. Great Southern Bancorp | Washington Federal vs. First Mid Illinois | Washington Federal vs. Franklin Financial Services |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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