Correlation Between Citizens Community and First Northwest
Can any of the company-specific risk be diversified away by investing in both Citizens Community and First Northwest 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 Citizens Community and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Community Bancorp and First Northwest Bancorp, you can compare the effects of market volatilities on Citizens Community and First Northwest 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 Citizens Community with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Community and First Northwest.
Diversification Opportunities for Citizens Community and First Northwest
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citizens and First is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Community Bancorp and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest Bancorp and Citizens Community 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 Citizens Community Bancorp are associated (or correlated) with First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of Citizens Community i.e., Citizens Community and First Northwest go up and down completely randomly.
Pair Corralation between Citizens Community and First Northwest
Given the investment horizon of 90 days Citizens Community is expected to generate 1.04 times less return on investment than First Northwest. But when comparing it to its historical volatility, Citizens Community Bancorp is 1.29 times less risky than First Northwest. It trades about 0.44 of its potential returns per unit of risk. First Northwest Bancorp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,006 in First Northwest Bancorp on August 28, 2024 and sell it today you would earn a total of 163.00 from holding First Northwest Bancorp or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Community Bancorp vs. First Northwest Bancorp
Performance |
| Timeline |
| Citizens Community |
| First Northwest Bancorp |
Citizens Community and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Community and First Northwest
The main advantage of trading using opposite Citizens Community and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Community position performs unexpectedly, First Northwest 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 First Northwest will offset losses from the drop in First Northwest's long position.| Citizens Community vs. Home Federal Bancorp | Citizens Community vs. First Financial Northwest | Citizens Community vs. First Northwest Bancorp | Citizens Community vs. First Capital |
| First Northwest vs. Fifth Third Bancorp | First Northwest vs. Huntington Bancshares Incorporated | First Northwest vs. Comerica | First Northwest vs. MT Bank |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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