Correlation Between Rhinebeck Bancorp and First Community

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

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

Diversification Opportunities for Rhinebeck Bancorp and First Community

0.45

Correlation Coefficient

Rhinebeck Bancorp  First Community

Very weak diversification

The 3 months correlation between Rhinebeck and First is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Rhinebeck Bancorp and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community and Rhinebeck 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 Rhinebeck Bancorp are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of Rhinebeck Bancorp i.e., Rhinebeck Bancorp and First Community go up and down completely randomly.

Pair Corralation between Rhinebeck Bancorp and First Community

Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 1.4 times more return on investment than First Community. However, Rhinebeck Bancorp is 1.4 times more volatile than First Community. It trades about 0.17 of its potential returns per unit of risk. First Community is currently generating about 0.11 per unit of risk. If you would invest  1,094  in Rhinebeck Bancorp on May 14, 2025 and sell it today you would earn a total of  208.00  from holding Rhinebeck Bancorp or generate 19.01% return on investment over 90 days.

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

Rhinebeck Bancorp  vs.  First Community

Rhinebeck Bancorp

Risk-Adjusted Performance

Fair

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.

First Community

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, First Community may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Rhinebeck Bancorp and First Community

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

The idea behind Rhinebeck Bancorp and First Community 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.