Correlation Between Richmond Mutual and Pathfinder Bancorp

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

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

Diversification Opportunities for Richmond Mutual and Pathfinder Bancorp

0.46

Correlation Coefficient

Richmond Mutual  Pathfinder Bancorp

Very weak diversification

The 3 months correlation between Richmond and Pathfinder is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Richmond Mutual Bancorp. and Pathfinder Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pathfinder Bancorp and Richmond Mutual 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 Richmond Mutual Bancorporation are associated (or correlated) with Pathfinder Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pathfinder Bancorp has no effect on the direction of Richmond Mutual i.e., Richmond Mutual and Pathfinder Bancorp go up and down completely randomly.

Pair Corralation between Richmond Mutual and Pathfinder Bancorp

Given the investment horizon of 90 days Richmond Mutual Bancorporation is expected to generate 0.39 times more return on investment than Pathfinder Bancorp. However, Richmond Mutual Bancorporation is 2.59 times less risky than Pathfinder Bancorp. It trades about 0.24 of its potential returns per unit of risk. Pathfinder Bancorp is currently generating about 0.06 per unit of risk. If you would invest  1,262  in Richmond Mutual Bancorporation on September 13, 2024 and sell it today you would earn a total of  211.00  from holding Richmond Mutual Bancorporation or generate 16.72% return on investment over 90 days.

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

Richmond Mutual Bancorp.  vs.  Pathfinder Bancorp

Richmond Mutual Banc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Richmond Mutual Bancorporation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Richmond Mutual demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pathfinder Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pathfinder Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical indicators, Pathfinder Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Richmond Mutual and Pathfinder Bancorp

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

The idea behind Richmond Mutual Bancorporation and Pathfinder Bancorp 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.