Correlation Between ECB Bancorp and Rhinebeck Bancorp

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

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

Diversification Opportunities for ECB Bancorp and Rhinebeck Bancorp

-0.32

Correlation Coefficient

ECB Bancorp  Rhinebeck Bancorp

Very good diversification

The 3 months correlation between ECB and Rhinebeck is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ECB Bancorp and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp and ECB 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 ECB Bancorp are associated (or correlated) with Rhinebeck Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rhinebeck Bancorp has no effect on the direction of ECB Bancorp i.e., ECB Bancorp and Rhinebeck Bancorp go up and down completely randomly.

Pair Corralation between ECB Bancorp and Rhinebeck Bancorp

Given the investment horizon of 90 days ECB Bancorp is expected to generate 7.55 times less return on investment than Rhinebeck Bancorp. But when comparing it to its historical volatility, ECB Bancorp is 1.15 times less risky than Rhinebeck Bancorp. It trades about 0.03 of its potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,029  in Rhinebeck Bancorp on April 21, 2025 and sell it today you would earn a total of  218.00  from holding Rhinebeck Bancorp or generate 21.19% return on investment over 90 days.

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

ECB Bancorp  vs.  Rhinebeck Bancorp

ECB Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ECB Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, ECB Bancorp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Rhinebeck Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, Rhinebeck Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ECB Bancorp and Rhinebeck Bancorp

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

The idea behind ECB Bancorp and Rhinebeck 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.