Correlation Between Red River and Rhinebeck Bancorp

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

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

Diversification Opportunities for Red River and Rhinebeck Bancorp

-0.02

Correlation Coefficient

Red River  Rhinebeck Bancorp

Good diversification

The 3 months correlation between Red and Rhinebeck is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Red River Bancshares and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp and Red River 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 Red River Bancshares 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 Red River i.e., Red River and Rhinebeck Bancorp go up and down completely randomly.

Pair Corralation between Red River and Rhinebeck Bancorp

Given the investment horizon of 90 days Red River Bancshares is expected to generate 0.74 times more return on investment than Rhinebeck Bancorp. However, Red River Bancshares is 1.35 times less risky than Rhinebeck Bancorp. It trades about 0.04 of its potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.0 per unit of risk. If you would invest  6,244  in Red River Bancshares on July 6, 2025 and sell it today you would earn a total of  226.00  from holding Red River Bancshares or generate 3.62% return on investment over 90 days.

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

Red River Bancshares  vs.  Rhinebeck Bancorp

Red River Bancshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Red River Bancshares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Red River is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Rhinebeck Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days Rhinebeck Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Rhinebeck Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Red River and Rhinebeck Bancorp

The main advantage of trading using opposite Red River and Rhinebeck Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red River 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 Red River Bancshares 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.