Correlation Between Rhinebeck Bancorp and Investar Holding

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

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

Diversification Opportunities for Rhinebeck Bancorp and Investar Holding

0.76

Correlation Coefficient

Rhinebeck Bancorp  Investar Holding

Poor diversification

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

Pair Corralation between Rhinebeck Bancorp and Investar Holding

Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 1.55 times less return on investment than Investar Holding. In addition to that, Rhinebeck Bancorp is 1.23 times more volatile than Investar Holding Corp. It trades about 0.08 of its total potential returns per unit of risk. Investar Holding Corp is currently generating about 0.16 per unit of volatility. If you would invest  1,196  in Investar Holding Corp on September 4, 2024 and sell it today you would earn a total of  1,162  from holding Investar Holding Corp or generate 97.16% return on investment over 90 days.

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

Rhinebeck Bancorp  vs.  Investar Holding Corp

Rhinebeck Bancorp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 12 (%) 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.

Investar Holding Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investar Holding Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Investar Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rhinebeck Bancorp and Investar Holding

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

The idea behind Rhinebeck Bancorp and Investar Holding Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.