Correlation Between First Financial and Glacier Bancorp
Can any of the company-specific risk be diversified away by investing in both First Financial and Glacier 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 First Financial and Glacier Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Bankshares and Glacier Bancorp, you can compare the effects of market volatilities on First Financial and Glacier 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 First Financial with a short position of Glacier Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Glacier Bancorp.
Diversification Opportunities for First Financial and Glacier Bancorp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Glacier is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Bankshares and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier Bancorp and First 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 First Financial Bankshares are associated (or correlated) with Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of First Financial i.e., First Financial and Glacier Bancorp go up and down completely randomly.
Pair Corralation between First Financial and Glacier Bancorp
Given the investment horizon of 90 days First Financial is expected to generate 1.71 times less return on investment than Glacier Bancorp. In addition to that, First Financial is 1.13 times more volatile than Glacier Bancorp. It trades about 0.15 of its total potential returns per unit of risk. Glacier Bancorp is currently generating about 0.29 per unit of volatility. If you would invest 4,713 in Glacier Bancorp on August 24, 2024 and sell it today you would earn a total of 996.00 from holding Glacier Bancorp or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Bankshares vs. Glacier Bancorp
Performance |
| Timeline |
| First Financial Bank |
| Glacier Bancorp |
First Financial and Glacier Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Glacier Bancorp
The main advantage of trading using opposite First Financial and Glacier Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Glacier 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 Glacier Bancorp will offset losses from the drop in Glacier Bancorp's long position.| First Financial vs. BOK Financial | First Financial vs. Auburn National Bancorporation | First Financial vs. Great Southern Bancorp | First Financial vs. First Guaranty Bancshares |
| Glacier Bancorp vs. CVB Financial | Glacier Bancorp vs. Independent Bank Group | Glacier Bancorp vs. Columbia Banking System | Glacier Bancorp vs. First Financial Bankshares |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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