Correlation Between NBT Bancorp and Investar Holding

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

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

Diversification Opportunities for NBT Bancorp and Investar Holding

0.79

Correlation Coefficient

NBT Bancorp  Investar Holding

Poor diversification

The 3 months correlation between NBT and Investar is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NBT Bancorp and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp and NBT 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 NBT Bancorp are associated (or correlated) with Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of NBT Bancorp i.e., NBT Bancorp and Investar Holding go up and down completely randomly.

Pair Corralation between NBT Bancorp and Investar Holding

Given the investment horizon of 90 days NBT Bancorp is expected to generate 0.95 times more return on investment than Investar Holding. However, NBT Bancorp is 1.05 times less risky than Investar Holding. It trades about 0.03 of its potential returns per unit of risk. Investar Holding Corp is currently generating about -0.18 per unit of risk. If you would invest  4,715  in NBT Bancorp on December 2, 2024 and sell it today you would earn a total of  60.00  from holding NBT Bancorp or generate 1.27% return on investment over 90 days.

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

NBT Bancorp  vs.  Investar Holding Corp

NBT Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days NBT Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NBT Bancorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Investar Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investar Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with NBT Bancorp and Investar Holding

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

The idea behind NBT Bancorp and Investar Holding Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.