Correlation Between Rhinebeck Bancorp and Union Bankshares

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

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

Diversification Opportunities for Rhinebeck Bancorp and Union Bankshares

-0.59

Correlation Coefficient

Rhinebeck Bancorp  Union Bankshares

Excellent diversification

The 3 months correlation between Rhinebeck and Union is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rhinebeck Bancorp and Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bankshares 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 Union Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bankshares has no effect on the direction of Rhinebeck Bancorp i.e., Rhinebeck Bancorp and Union Bankshares go up and down completely randomly.

Pair Corralation between Rhinebeck Bancorp and Union Bankshares

Given the investment horizon of 90 days Rhinebeck Bancorp is expected to generate 0.73 times more return on investment than Union Bankshares. However, Rhinebeck Bancorp is 1.37 times less risky than Union Bankshares. It trades about 0.15 of its potential returns per unit of risk. Union Bankshares is currently generating about -0.1 per unit of risk. If you would invest  1,122  in Rhinebeck Bancorp on May 1, 2025 and sell it today you would earn a total of  181.00  from holding Rhinebeck Bancorp or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Rhinebeck Bancorp  vs.  Union Bankshares

Rhinebeck Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 11 (%) 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.

Union Bankshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Union Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Rhinebeck Bancorp and Union Bankshares

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

The idea behind Rhinebeck Bancorp and Union 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.