Correlation Between First Financial and ESSA Bancorp
Can any of the company-specific risk be diversified away by investing in both First Financial and ESSA 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 ESSA 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 ESSA Bancorp, you can compare the effects of market volatilities on First Financial and ESSA 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 ESSA Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and ESSA Bancorp.
Diversification Opportunities for First Financial and ESSA Bancorp
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and ESSA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and ESSA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA 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 ESSA Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Bancorp has no effect on the direction of First Financial i.e., First Financial and ESSA Bancorp go up and down completely randomly.
Pair Corralation between First Financial and ESSA Bancorp
Given the investment horizon of 90 days First Financial Northwest is expected to generate 1.31 times more return on investment than ESSA Bancorp. However, First Financial is 1.31 times more volatile than ESSA Bancorp. It trades about 0.08 of its potential returns per unit of risk. ESSA Bancorp is currently generating about 0.02 per unit of risk. If you would invest 1,331 in First Financial Northwest on August 25, 2024 and sell it today you would earn a total of 916.00 from holding First Financial Northwest or generate 68.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Northwest vs. ESSA Bancorp
Performance |
| Timeline |
| First Financial Northwest |
| ESSA Bancorp |
First Financial and ESSA Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and ESSA Bancorp
The main advantage of trading using opposite First Financial and ESSA Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, ESSA 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 ESSA Bancorp will offset losses from the drop in ESSA Bancorp's long position.| First Financial vs. Fifth Third Bancorp | First Financial vs. Zions Bancorporation | First Financial vs. Huntington Bancshares Incorporated | First Financial vs. PNC Financial Services |
| ESSA Bancorp vs. Fifth Third Bancorp | ESSA Bancorp vs. Zions Bancorporation | ESSA Bancorp vs. Huntington Bancshares Incorporated | ESSA Bancorp vs. PNC Financial Services |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |