Correlation Between South Plains and Rhinebeck Bancorp

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

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

Diversification Opportunities for South Plains and Rhinebeck Bancorp

0.72

Correlation Coefficient

South Plains  Rhinebeck Bancorp

Poor diversification

The 3 months correlation between South and Rhinebeck is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding South Plains Financial and Rhinebeck Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rhinebeck Bancorp and South Plains 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 South Plains Financial 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 South Plains i.e., South Plains and Rhinebeck Bancorp go up and down completely randomly.

Pair Corralation between South Plains and Rhinebeck Bancorp

Given the investment horizon of 90 days South Plains is expected to generate 1.31 times less return on investment than Rhinebeck Bancorp. In addition to that, South Plains is 1.17 times more volatile than Rhinebeck Bancorp. It trades about 0.06 of its total potential returns per unit of risk. Rhinebeck Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  1,129  in Rhinebeck Bancorp on May 4, 2025 and sell it today you would earn a total of  111.00  from holding Rhinebeck Bancorp or generate 9.83% return on investment over 90 days.

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

South Plains Financial  vs.  Rhinebeck Bancorp

South Plains Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in South Plains Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, South Plains may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Rhinebeck Bancorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rhinebeck Bancorp are ranked lower than 7 (%) 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 South Plains and Rhinebeck Bancorp

The main advantage of trading using opposite South Plains and Rhinebeck Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Plains 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 South Plains Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.