Correlation Between Rhinebeck Bancorp and Orrstown Financial

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

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

Diversification Opportunities for Rhinebeck Bancorp and Orrstown Financial

-0.76

Correlation Coefficient

Rhinebeck Bancorp  Orrstown Financial

Pay attention - limited upside

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

Pair Corralation between Rhinebeck Bancorp and Orrstown Financial

Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 0.66 times more return on investment than Orrstown Financial. However, Rhinebeck Bancorp is 1.52 times less risky than Orrstown Financial. It trades about 0.06 of its potential returns per unit of risk. Orrstown Financial Services is currently generating about -0.21 per unit of risk. If you would invest  963.00  in Rhinebeck Bancorp on December 30, 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	100.0%
Values	Daily Returns

Rhinebeck Bancorp  vs.  Orrstown Financial Services

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.

Orrstown Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orrstown Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Rhinebeck Bancorp and Orrstown Financial

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

The idea behind Rhinebeck Bancorp and Orrstown Financial Services 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .