Correlation Between Rhinebeck Bancorp and Greenville Federal

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

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

Diversification Opportunities for Rhinebeck Bancorp and Greenville Federal

-0.4

Correlation Coefficient

Rhinebeck Bancorp  Greenville Federal

Very good diversification

The 3 months correlation between Rhinebeck and Greenville is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Rhinebeck Bancorp and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal 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 Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of Rhinebeck Bancorp i.e., Rhinebeck Bancorp and Greenville Federal go up and down completely randomly.

Pair Corralation between Rhinebeck Bancorp and Greenville Federal

Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 1.2 times more return on investment than Greenville Federal. However, Rhinebeck Bancorp is 1.2 times more volatile than Greenville Federal Financial. It trades about -0.11 of its potential returns per unit of risk. Greenville Federal Financial is currently generating about -0.21 per unit of risk. If you would invest  975.00  in Rhinebeck Bancorp on September 21, 2024 and sell it today you would lose (17.00) from holding Rhinebeck Bancorp or give up 1.74% of portfolio value over 90 days.

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

Rhinebeck Bancorp  vs.  Greenville Federal Financial

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.

Greenville Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenville Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greenville Federal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Rhinebeck Bancorp and Greenville Federal

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

The idea behind Rhinebeck Bancorp and Greenville Federal Financial 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.