Correlation Between Old National and NBT Bancorp

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

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

Diversification Opportunities for Old National and NBT Bancorp

0.44

Correlation Coefficient

Old National  NBT Bancorp

Very weak diversification

The 3 months correlation between Old and NBT is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Old National Bancorp and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Bancorp and Old National 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 Old National Bancorp are associated (or correlated) with NBT Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Bancorp has no effect on the direction of Old National i.e., Old National and NBT Bancorp go up and down completely randomly.

Pair Corralation between Old National and NBT Bancorp

Considering the 90-day investment horizon Old National Bancorp is expected to generate 1.22 times more return on investment than NBT Bancorp. However, Old National is 1.22 times more volatile than NBT Bancorp. It trades about -0.04 of its potential returns per unit of risk. NBT Bancorp is currently generating about -0.14 per unit of risk. If you would invest  2,221  in Old National Bancorp on December 17, 2024 and sell it today you would lose (125.00) from holding Old National Bancorp or give up 5.63% of portfolio value over 90 days.

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

Old National Bancorp  vs.  NBT Bancorp

Old National Bancorp

Risk-Adjusted Performance

Very Weak

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

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Old National and NBT Bancorp

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

The idea behind Old National Bancorp and NBT 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.