Correlation Between Village Bank and NBT Bancorp
Can any of the company-specific risk be diversified away by investing in both Village Bank and NBT 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 Village Bank and NBT Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Village Bank and and NBT Bancorp, you can compare the effects of market volatilities on Village Bank and NBT 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 Village Bank with a short position of NBT Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Village Bank and NBT Bancorp.
Diversification Opportunities for Village Bank and NBT Bancorp
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Village and NBT is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Village Bank and and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Bancorp and Village Bank 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 Village Bank and are associated (or correlated) with NBT Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Bancorp has no effect on the direction of Village Bank i.e., Village Bank and NBT Bancorp go up and down completely randomly.
Pair Corralation between Village Bank and NBT Bancorp
Given the investment horizon of 90 days Village Bank is expected to generate 1.23 times less return on investment than NBT Bancorp. But when comparing it to its historical volatility, Village Bank and is 4.03 times less risky than NBT Bancorp. It trades about 0.09 of its potential returns per unit of risk. NBT Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,715 in NBT Bancorp on December 2, 2024 and sell it today you would earn a total of 60.00 from holding NBT Bancorp or generate 1.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 80.0% |
Values | Daily Returns |
Village Bank and vs. NBT Bancorp
Performance |
Timeline |
Village Bank |
NBT Bancorp |
Village Bank and NBT Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Village Bank and NBT Bancorp
The main advantage of trading using opposite Village Bank and NBT Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Bank position performs unexpectedly, NBT 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 NBT Bancorp will offset losses from the drop in NBT Bancorp's long position.Village Bank vs. Prime Meridian Holding | Village Bank vs. William Penn Bancorp | Village Bank vs. Pathfinder Bancorp | Village Bank vs. Magyar Bancorp |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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