Correlation Between Northeast Bancorp and Greene County

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

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

Diversification Opportunities for Northeast Bancorp and Greene County

0.45

Correlation Coefficient

Northeast Bancorp  Greene County

Very weak diversification

The 3 months correlation between Northeast and Greene is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Bancorp and Greene County Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greene County Bancorp and Northeast Bancorp 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 Northeast Bancorp are associated (or correlated) with Greene County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greene County Bancorp has no effect on the direction of Northeast Bancorp i.e., Northeast Bancorp and Greene County go up and down completely randomly.

Pair Corralation between Northeast Bancorp and Greene County

Considering the 90-day investment horizon Northeast Bancorp is expected to generate 0.68 times more return on investment than Greene County. However, Northeast Bancorp is 1.47 times less risky than Greene County. It trades about 0.24 of its potential returns per unit of risk. Greene County Bancorp is currently generating about 0.03 per unit of risk. If you would invest  6,989  in Northeast Bancorp on September 15, 2024 and sell it today you would earn a total of  2,861  from holding Northeast Bancorp or generate 40.94% return on investment over 90 days.

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

Northeast Bancorp  vs.  Greene County Bancorp

Northeast Bancorp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northeast Bancorp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Northeast Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Greene County Bancorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greene County Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Greene County may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Northeast Bancorp and Greene County

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

The idea behind Northeast Bancorp and Greene County 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.