Correlation Between First Financial and California BanCorp
Can any of the company-specific risk be diversified away by investing in both First Financial and California 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 California BanCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Northwest and California BanCorp, you can compare the effects of market volatilities on First Financial and California 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 California BanCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and California BanCorp.
Diversification Opportunities for First Financial and California BanCorp
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and California is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and California BanCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California 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 Northwest are associated (or correlated) with California BanCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California BanCorp has no effect on the direction of First Financial i.e., First Financial and California BanCorp go up and down completely randomly.
Pair Corralation between First Financial and California BanCorp
If you would invest 2,226 in First Financial Northwest on September 2, 2024 and sell it today you would earn a total of 34.00 from holding First Financial Northwest or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
First Financial Northwest vs. California BanCorp
Performance |
| Timeline |
| First Financial Northwest |
| California BanCorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Financial and California BanCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and California BanCorp
The main advantage of trading using opposite First Financial and California BanCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, California 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 California BanCorp will offset losses from the drop in California BanCorp's long position.| First Financial vs. Home Federal Bancorp | First Financial vs. First Northwest Bancorp | First Financial vs. First Capital | First Financial vs. Community West Bancshares |
| California BanCorp vs. Home Federal Bancorp | California BanCorp vs. First Financial Northwest | California BanCorp vs. First Northwest Bancorp | California BanCorp vs. First Capital |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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