Correlation Between Orrstown Financial and Rhinebeck Bancorp

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

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

Diversification Opportunities for Orrstown Financial and Rhinebeck Bancorp

-0.76

Correlation Coefficient

Orrstown Financial  Rhinebeck Bancorp

Pay attention - limited upside

The 3 months correlation between Orrstown and Rhinebeck is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Orrstown Financial Services and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp and Orrstown Financial 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 Orrstown Financial Services are associated (or correlated) with Rhinebeck Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rhinebeck Bancorp has no effect on the direction of Orrstown Financial i.e., Orrstown Financial and Rhinebeck Bancorp go up and down completely randomly.

Pair Corralation between Orrstown Financial and Rhinebeck Bancorp

Given the investment horizon of 90 days Orrstown Financial Services is expected to under-perform the Rhinebeck Bancorp. In addition to that, Orrstown Financial is 1.52 times more volatile than Rhinebeck Bancorp. It trades about -0.21 of its total potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.06 per unit of volatility. If you would invest  963.00  in Rhinebeck Bancorp on December 30, 2024 and sell it today you would earn a total of  29.00  from holding Rhinebeck Bancorp or generate 3.01% return on investment over 90 days.

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

Orrstown Financial Services  vs.  Rhinebeck Bancorp

Orrstown Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orrstown Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Rhinebeck Bancorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Rhinebeck Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Orrstown Financial and Rhinebeck Bancorp

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

The idea behind Orrstown Financial Services and Rhinebeck 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.