Correlation Between NSTS Bancorp and PB Bankshares

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

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

Diversification Opportunities for NSTS Bancorp and PB Bankshares

0.12

Correlation Coefficient

NSTS Bancorp  PB Bankshares

Average diversification

The 3 months correlation between NSTS and PBBK is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NSTS Bancorp and PB Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PB Bankshares and NSTS 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 NSTS Bancorp are associated (or correlated) with PB Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PB Bankshares has no effect on the direction of NSTS Bancorp i.e., NSTS Bancorp and PB Bankshares go up and down completely randomly.

Pair Corralation between NSTS Bancorp and PB Bankshares

Given the investment horizon of 90 days NSTS Bancorp is expected to generate 3.56 times less return on investment than PB Bankshares. But when comparing it to its historical volatility, NSTS Bancorp is 3.09 times less risky than PB Bankshares. It trades about 0.07 of its potential returns per unit of risk. PB Bankshares is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,598  in PB Bankshares on May 5, 2025 and sell it today you would earn a total of  217.00  from holding PB Bankshares or generate 13.58% return on investment over 90 days.

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

NSTS Bancorp  vs.  PB Bankshares

NSTS Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NSTS Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, NSTS Bancorp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

PB Bankshares

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PB Bankshares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental drivers, PB Bankshares disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NSTS Bancorp and PB Bankshares

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

The idea behind NSTS Bancorp and PB Bankshares 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.