Correlation Between First Community and Rhinebeck Bancorp

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

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

Diversification Opportunities for First Community and Rhinebeck Bancorp

0.44

Correlation Coefficient

First Community  Rhinebeck Bancorp

Very weak diversification

The 3 months correlation between First and Rhinebeck is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp and First Community 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 First Community 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 First Community i.e., First Community and Rhinebeck Bancorp go up and down completely randomly.

Pair Corralation between First Community and Rhinebeck Bancorp

Given the investment horizon of 90 days First Community is expected to generate 2.6 times less return on investment than Rhinebeck Bancorp. But when comparing it to its historical volatility, First Community is 1.42 times less risky than Rhinebeck Bancorp. It trades about 0.06 of its potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,114  in Rhinebeck Bancorp on May 12, 2025 and sell it today you would earn a total of  130.00  from holding Rhinebeck Bancorp or generate 11.67% return on investment over 90 days.

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

First Community  vs.  Rhinebeck Bancorp

First Community

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, First Community is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Rhinebeck Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, Rhinebeck Bancorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First Community and Rhinebeck Bancorp

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

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.