Correlation Between Community Bank and NBT Bancorp
Can any of the company-specific risk be diversified away by investing in both Community Bank and NBT 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 Community Bank and NBT Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Bank System and NBT Bancorp, you can compare the effects of market volatilities on Community Bank and NBT 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 Community Bank with a short position of NBT Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Bank and NBT Bancorp.
Diversification Opportunities for Community Bank and NBT Bancorp
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Community and NBT is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Community Bank System and NBT Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Bancorp and Community Bank 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 Community Bank System are associated (or correlated) with NBT Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Bancorp has no effect on the direction of Community Bank i.e., Community Bank and NBT Bancorp go up and down completely randomly.
Pair Corralation between Community Bank and NBT Bancorp
Considering the 90-day investment horizon Community Bank System is expected to generate 1.11 times more return on investment than NBT Bancorp. However, Community Bank is 1.11 times more volatile than NBT Bancorp. It trades about 0.02 of its potential returns per unit of risk. NBT Bancorp is currently generating about 0.01 per unit of risk. If you would invest 5,567 in Community Bank System on June 6, 2025 and sell it today you would earn a total of 430.00 from holding Community Bank System or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Community Bank System vs. NBT Bancorp
Performance |
| Timeline |
| Community Bank System |
| NBT Bancorp |
Community Bank and NBT Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Bank and NBT Bancorp
The main advantage of trading using opposite Community Bank and NBT Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Bank position performs unexpectedly, NBT 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 NBT Bancorp will offset losses from the drop in NBT Bancorp's long position.| Community Bank vs. NBT Bancorp | Community Bank vs. Financial Institutions | Community Bank vs. Berkshire Hills Bancorp | Community Bank vs. Fidelity DD Bancorp |
| NBT Bancorp vs. National Bank Holdings | NBT Bancorp vs. Community Bank System | NBT Bancorp vs. Byline Bancorp | NBT Bancorp vs. Home Bancorp |
Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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