Correlation Between First Financial and Luther Burbank
Can any of the company-specific risk be diversified away by investing in both First Financial and Luther Burbank 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 Luther Burbank 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 Luther Burbank, you can compare the effects of market volatilities on First Financial and Luther Burbank 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 Luther Burbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Luther Burbank.
Diversification Opportunities for First Financial and Luther Burbank
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Luther is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and Luther Burbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luther Burbank 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 Luther Burbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luther Burbank has no effect on the direction of First Financial i.e., First Financial and Luther Burbank go up and down completely randomly.
Pair Corralation between First Financial and Luther Burbank
If you would invest 1,003 in Luther Burbank on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Luther Burbank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
First Financial Northwest vs. Luther Burbank
Performance |
| Timeline |
| First Financial Northwest |
| Luther Burbank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Financial and Luther Burbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Luther Burbank
The main advantage of trading using opposite First Financial and Luther Burbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Luther Burbank 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 Luther Burbank will offset losses from the drop in Luther Burbank's long position.| First Financial vs. Fifth Third Bancorp | First Financial vs. Huntington Bancshares Incorporated | First Financial vs. Comerica | First Financial vs. MT Bank |
| Luther Burbank vs. First Community | Luther Burbank vs. Community West Bancshares | Luther Burbank vs. First Financial Northwest | Luther Burbank vs. First Northwest Bancorp |
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 Stocks Directory module to find actively traded stocks across global markets.
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