Correlation Between RLI Corp and Pioneer Bankcorp

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

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

Diversification Opportunities for RLI Corp and Pioneer Bankcorp

0.77

Correlation Coefficient

RLI Corp  Pioneer Bankcorp

Poor diversification

The 3 months correlation between RLI and Pioneer is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding RLI Corp and Pioneer Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Bankcorp and RLI Corp 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 RLI Corp are associated (or correlated) with Pioneer Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Bankcorp has no effect on the direction of RLI Corp i.e., RLI Corp and Pioneer Bankcorp go up and down completely randomly.

Pair Corralation between RLI Corp and Pioneer Bankcorp

Considering the 90-day investment horizon RLI Corp is expected to generate 1.3 times more return on investment than Pioneer Bankcorp. However, RLI Corp is 1.3 times more volatile than Pioneer Bankcorp. It trades about 0.04 of its potential returns per unit of risk. Pioneer Bankcorp is currently generating about 0.04 per unit of risk. If you would invest  13,547  in RLI Corp on October 4, 2024 and sell it today you would earn a total of  2,936  from holding RLI Corp or generate 21.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

RLI Corp  vs.  Pioneer Bankcorp

RLI Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RLI Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, RLI Corp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pioneer Bankcorp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Bankcorp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking signals, Pioneer Bankcorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with RLI Corp and Pioneer Bankcorp

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

The idea behind RLI Corp and Pioneer Bankcorp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.