Correlation Between Blue Ridge and Northrim BanCorp
Can any of the company-specific risk be diversified away by investing in both Blue Ridge and Northrim 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 Blue Ridge and Northrim BanCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blue Ridge Bankshares and Northrim BanCorp, you can compare the effects of market volatilities on Blue Ridge and Northrim 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 Blue Ridge with a short position of Northrim BanCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Ridge and Northrim BanCorp.
Diversification Opportunities for Blue Ridge and Northrim BanCorp
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Blue and Northrim is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Blue Ridge Bankshares and Northrim BanCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northrim BanCorp and Blue Ridge 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 Blue Ridge Bankshares are associated (or correlated) with Northrim BanCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northrim BanCorp has no effect on the direction of Blue Ridge i.e., Blue Ridge and Northrim BanCorp go up and down completely randomly.
Pair Corralation between Blue Ridge and Northrim BanCorp
Given the investment horizon of 90 days Blue Ridge Bankshares is expected to under-perform the Northrim BanCorp. In addition to that, Blue Ridge is 1.92 times more volatile than Northrim BanCorp. It trades about -0.02 of its total potential returns per unit of risk. Northrim BanCorp is currently generating about 0.11 per unit of volatility. If you would invest 3,458 in Northrim BanCorp on August 27, 2024 and sell it today you would earn a total of 5,392 from holding Northrim BanCorp or generate 155.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blue Ridge Bankshares vs. Northrim BanCorp
Performance |
| Timeline |
| Blue Ridge Bankshares |
| Northrim BanCorp |
Blue Ridge and Northrim BanCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blue Ridge and Northrim BanCorp
The main advantage of trading using opposite Blue Ridge and Northrim BanCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Ridge position performs unexpectedly, Northrim 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 Northrim BanCorp will offset losses from the drop in Northrim BanCorp's long position.| Blue Ridge vs. LINKBANCORP | Blue Ridge vs. Colony Bankcorp | Blue Ridge vs. Bankwell Financial Group | Blue Ridge vs. ECB Bancorp |
| Northrim BanCorp vs. Peoples Bancorp | Northrim BanCorp vs. Eagle Bancorp | Northrim BanCorp vs. United Bankshares | Northrim BanCorp vs. Pacific Premier 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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