Correlation Between Northeast Indiana and Bank of Botetourt

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

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

Diversification Opportunities for Northeast Indiana and Bank of Botetourt

0.0

Correlation Coefficient

Northeast Indiana  Bank of Botetourt

Pay attention - limited upside

The 3 months correlation between Northeast and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Indiana Bancorp and Bank of Botetourt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Botetourt and Northeast Indiana 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 Indiana Bancorp are associated (or correlated) with Bank of Botetourt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Botetourt has no effect on the direction of Northeast Indiana i.e., Northeast Indiana and Bank of Botetourt go up and down completely randomly.

Pair Corralation between Northeast Indiana and Bank of Botetourt

If you would invest  3,182  in Bank of Botetourt on December 26, 2024 and sell it today you would earn a total of  198.00  from holding Bank of Botetourt or generate 6.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Northeast Indiana Bancorp  vs.  Bank of Botetourt

Northeast Indiana Bancorp

Risk-Adjusted Performance

Very Weak

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

Bank of Botetourt

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Botetourt are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Bank of Botetourt may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Northeast Indiana and Bank of Botetourt

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

The idea behind Northeast Indiana Bancorp and Bank of Botetourt 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.