Correlation Between ChoiceOne Financial and Northway Financial
Can any of the company-specific risk be diversified away by investing in both ChoiceOne Financial and Northway Financial 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 ChoiceOne Financial and Northway Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChoiceOne Financial Services and Northway Financial, you can compare the effects of market volatilities on ChoiceOne Financial and Northway Financial 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 ChoiceOne Financial with a short position of Northway Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChoiceOne Financial and Northway Financial.
Diversification Opportunities for ChoiceOne Financial and Northway Financial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ChoiceOne and Northway is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ChoiceOne Financial Services and Northway Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northway Financial and ChoiceOne Financial 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 ChoiceOne Financial Services are associated (or correlated) with Northway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northway Financial has no effect on the direction of ChoiceOne Financial i.e., ChoiceOne Financial and Northway Financial go up and down completely randomly.
Pair Corralation between ChoiceOne Financial and Northway Financial
If you would invest 2,421 in ChoiceOne Financial Services on August 29, 2024 and sell it today you would earn a total of 1,306 from holding ChoiceOne Financial Services or generate 53.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.79% |
| Values | Daily Returns |
ChoiceOne Financial Services vs. Northway Financial
Performance |
| Timeline |
| ChoiceOne Financial |
| Northway Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ChoiceOne Financial and Northway Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChoiceOne Financial and Northway Financial
The main advantage of trading using opposite ChoiceOne Financial and Northway Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChoiceOne Financial position performs unexpectedly, Northway Financial 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 Northway Financial will offset losses from the drop in Northway Financial's long position.| ChoiceOne Financial vs. Home Federal Bancorp | ChoiceOne Financial vs. First Northwest Bancorp | ChoiceOne Financial vs. Lake Shore Bancorp | ChoiceOne Financial vs. Affinity Bancshares |
| Northway Financial vs. Katahdin Bankshares Corp | Northway Financial vs. First Northern Community | Northway Financial vs. Pacific Financial Corp | Northway Financial vs. QNB Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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