Correlation Between First Financial and ChoiceOne Financial
Can any of the company-specific risk be diversified away by investing in both First Financial and ChoiceOne 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 First Financial and ChoiceOne Financial 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 ChoiceOne Financial Services, you can compare the effects of market volatilities on First Financial and ChoiceOne 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 First Financial with a short position of ChoiceOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and ChoiceOne Financial.
Diversification Opportunities for First Financial and ChoiceOne Financial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and ChoiceOne is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and ChoiceOne Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChoiceOne Financial 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 ChoiceOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChoiceOne Financial has no effect on the direction of First Financial i.e., First Financial and ChoiceOne Financial go up and down completely randomly.
Pair Corralation between First Financial and ChoiceOne Financial
Given the investment horizon of 90 days First Financial Northwest is expected to generate 0.68 times more return on investment than ChoiceOne Financial. However, First Financial Northwest is 1.47 times less risky than ChoiceOne Financial. It trades about 0.16 of its potential returns per unit of risk. ChoiceOne Financial Services is currently generating about -0.02 per unit of risk. If you would invest 2,092 in First Financial Northwest on November 9, 2024 and sell it today you would earn a total of 63.00 from holding First Financial Northwest or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Northwest vs. ChoiceOne Financial Services
Performance |
| Timeline |
| First Financial Northwest |
| ChoiceOne Financial |
First Financial and ChoiceOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and ChoiceOne Financial
The main advantage of trading using opposite First Financial and ChoiceOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, ChoiceOne 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 ChoiceOne Financial will offset losses from the drop in ChoiceOne Financial'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 |
| ChoiceOne Financial vs. Home Federal Bancorp | ChoiceOne Financial vs. First Northwest Bancorp | ChoiceOne Financial vs. Lake Shore Bancorp | ChoiceOne Financial vs. Affinity Bancshares |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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