Correlation Between Popular and Rhinebeck Bancorp

Can any of the company-specific risk be diversified away by investing in both Popular 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 Popular and Rhinebeck Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Popular and Rhinebeck Bancorp, you can compare the effects of market volatilities on Popular 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 Popular with a short position of Rhinebeck Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Popular and Rhinebeck Bancorp.

Diversification Opportunities for Popular and Rhinebeck Bancorp

-0.15

Correlation Coefficient

Popular  Rhinebeck Bancorp

Good diversification

The 3 months correlation between Popular and Rhinebeck is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Popular and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp and Popular 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 Popular 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 Popular i.e., Popular and Rhinebeck Bancorp go up and down completely randomly.

Pair Corralation between Popular and Rhinebeck Bancorp

Given the investment horizon of 90 days Popular is expected to under-perform the Rhinebeck Bancorp. In addition to that, Popular is 1.82 times more volatile than Rhinebeck Bancorp. It trades about -0.01 of its total potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.06 per unit of volatility. If you would invest  963.00  in Rhinebeck Bancorp on December 30, 2024 and sell it today you would earn a total of  29.00  from holding Rhinebeck Bancorp or generate 3.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Popular  vs.  Rhinebeck Bancorp

Popular

Risk-Adjusted Performance

Very Weak

Over the last 90 days Popular has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Popular is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Rhinebeck Bancorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Rhinebeck Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Popular and Rhinebeck Bancorp

The main advantage of trading using opposite Popular and Rhinebeck Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Popular 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.

The idea behind Popular and Rhinebeck 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.