Correlation Between Rhinebeck Bancorp and Banco Santander

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

By analyzing existing cross correlation between Rhinebeck Bancorp and Banco Santander Brasil, you can compare the effects of market volatilities on Rhinebeck Bancorp and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rhinebeck Bancorp and Banco Santander.

Diversification Opportunities for Rhinebeck Bancorp and Banco Santander

-0.63

Correlation Coefficient

Rhinebeck Bancorp  Banco Santander

Excellent diversification

The 3 months correlation between Rhinebeck and Banco is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Rhinebeck Bancorp and Banco Santander Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Brasil 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander Brasil has no effect on the direction of Rhinebeck Bancorp i.e., Rhinebeck Bancorp and Banco Santander go up and down completely randomly.

Pair Corralation between Rhinebeck Bancorp and Banco Santander

Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 0.17 times more return on investment than Banco Santander. However, Rhinebeck Bancorp is 6.02 times less risky than Banco Santander. It trades about -0.23 of its potential returns per unit of risk. Banco Santander Brasil is currently generating about -0.08 per unit of risk. If you would invest  974.00  in Rhinebeck Bancorp on October 9, 2024 and sell it today you would lose (21.00) from holding Rhinebeck Bancorp or give up 2.16% of portfolio value over 90 days.

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

Rhinebeck Bancorp  vs.  Banco Santander Brasil

Rhinebeck Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rhinebeck Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Banco Santander Brasil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Santander Brasil has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Rhinebeck Bancorp and Banco Santander

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

The idea behind Rhinebeck Bancorp and Banco Santander Brasil 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.