Correlation Between Rhinebeck Bancorp and Citizens Bancorp

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

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

Diversification Opportunities for Rhinebeck Bancorp and Citizens Bancorp

0.13

Correlation Coefficient

Rhinebeck Bancorp  Citizens Bancorp

Average diversification

The 3 months correlation between Rhinebeck and Citizens is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Rhinebeck Bancorp and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv 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 Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of Rhinebeck Bancorp i.e., Rhinebeck Bancorp and Citizens Bancorp go up and down completely randomly.

Pair Corralation between Rhinebeck Bancorp and Citizens Bancorp

Given the investment horizon of 90 days Rhinebeck Bancorp is expected to under-perform the Citizens Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Rhinebeck Bancorp is 1.36 times less risky than Citizens Bancorp. The stock trades about -0.11 of its potential returns per unit of risk. The Citizens Bancorp Investment is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,400  in Citizens Bancorp Investment on September 21, 2024 and sell it today you would earn a total of  155.00  from holding Citizens Bancorp Investment or generate 6.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Rhinebeck Bancorp  vs.  Citizens Bancorp Investment

Rhinebeck Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, Rhinebeck Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Citizens Bancorp Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citizens Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Rhinebeck Bancorp and Citizens Bancorp

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

The idea behind Rhinebeck Bancorp and Citizens Bancorp Investment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.