Correlation Between Teb Bancorp and Pathfinder Bancorp

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

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

Diversification Opportunities for Teb Bancorp and Pathfinder Bancorp

-0.24

Correlation Coefficient

Teb Bancorp  Pathfinder Bancorp

Very good diversification

The 3 months correlation between Teb and Pathfinder is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Teb Bancorp and Pathfinder Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pathfinder Bancorp and Teb 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 Teb Bancorp 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 Teb Bancorp i.e., Teb Bancorp and Pathfinder Bancorp go up and down completely randomly.

Pair Corralation between Teb Bancorp and Pathfinder Bancorp

Given the investment horizon of 90 days Teb Bancorp is expected to generate 1.8 times more return on investment than Pathfinder Bancorp. However, Teb Bancorp is 1.8 times more volatile than Pathfinder Bancorp. It trades about 0.03 of its potential returns per unit of risk. Pathfinder Bancorp is currently generating about 0.03 per unit of risk. If you would invest  692.00  in Teb Bancorp on October 22, 2024 and sell it today you would earn a total of  45.00  from holding Teb Bancorp or generate 6.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.4%
Values	Daily Returns

Teb Bancorp  vs.  Pathfinder Bancorp

Teb Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teb Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Teb Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pathfinder Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pathfinder Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Pathfinder Bancorp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Teb Bancorp and Pathfinder Bancorp

The main advantage of trading using opposite Teb Bancorp and Pathfinder Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teb Bancorp 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 Teb Bancorp 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.