Correlation Between Greene County and First United

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

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

Diversification Opportunities for Greene County and First United

0.47

Correlation Coefficient

Greene County  First United

Very weak diversification

The 3 months correlation between Greene and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Greene County Bancorp and First United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First United and Greene County 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 Greene County Bancorp are associated (or correlated) with First United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First United has no effect on the direction of Greene County i.e., Greene County and First United go up and down completely randomly.

Pair Corralation between Greene County and First United

Given the investment horizon of 90 days Greene County Bancorp is expected to under-perform the First United. But the stock apears to be less risky and, when comparing its historical volatility, Greene County Bancorp is 1.54 times less risky than First United. The stock trades about -0.14 of its potential returns per unit of risk. The First United is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,353  in First United on December 28, 2024 and sell it today you would lose (274.00) from holding First United or give up 8.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Greene County Bancorp  vs.  First United

Greene County Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greene County Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

First United

Risk-Adjusted Performance

Very Weak

Over the last 90 days First United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Greene County and First United

The main advantage of trading using opposite Greene County and First United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greene County position performs unexpectedly, First United 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 First United will offset losses from the drop in First United's long position.

The idea behind Greene County Bancorp and First United 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.