Correlation Between Rhinebeck Bancorp and Auburn National

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

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

Diversification Opportunities for Rhinebeck Bancorp and Auburn National

-0.72

Correlation Coefficient

Rhinebeck Bancorp  Auburn National

Pay attention - limited upside

The 3 months correlation between Rhinebeck and Auburn is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Rhinebeck Bancorp and Auburn National Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn National Banc and Rhinebeck 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 Rhinebeck Bancorp are associated (or correlated) with Auburn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn National Banc has no effect on the direction of Rhinebeck Bancorp i.e., Rhinebeck Bancorp and Auburn National go up and down completely randomly.

Pair Corralation between Rhinebeck Bancorp and Auburn National

Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 0.48 times more return on investment than Auburn National. However, Rhinebeck Bancorp is 2.1 times less risky than Auburn National. It trades about 0.06 of its potential returns per unit of risk. Auburn National Bancorporation is currently generating about -0.09 per unit of risk. If you would invest  963.00  in Rhinebeck Bancorp on December 29, 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	98.36%
Values	Daily Returns

Rhinebeck Bancorp  vs.  Auburn National Bancorp.

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.

Auburn National Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auburn National Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Rhinebeck Bancorp and Auburn National

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

The idea behind Rhinebeck Bancorp and Auburn National Bancorporation 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.