Correlation Between First Financial and Northeast Community
Can any of the company-specific risk be diversified away by investing in both First Financial and Northeast Community 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 Northeast Community 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 Northeast Community Bancorp, you can compare the effects of market volatilities on First Financial and Northeast Community 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 Northeast Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Northeast Community.
Diversification Opportunities for First Financial and Northeast Community
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Northeast is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and Northeast Community Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Community 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 Northeast Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Community has no effect on the direction of First Financial i.e., First Financial and Northeast Community go up and down completely randomly.
Pair Corralation between First Financial and Northeast Community
Given the investment horizon of 90 days First Financial is expected to generate 104.77 times less return on investment than Northeast Community. But when comparing it to its historical volatility, First Financial Northwest is 2.49 times less risky than Northeast Community. It trades about 0.01 of its potential returns per unit of risk. Northeast Community Bancorp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,682 in Northeast Community Bancorp on August 31, 2024 and sell it today you would earn a total of 326.00 from holding Northeast Community Bancorp or generate 12.16% 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. Northeast Community Bancorp
Performance |
| Timeline |
| First Financial Northwest |
| Northeast Community |
First Financial and Northeast Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Northeast Community
The main advantage of trading using opposite First Financial and Northeast Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Northeast Community 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 Northeast Community will offset losses from the drop in Northeast Community'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 |
| Northeast Community vs. Community West Bancshares | Northeast Community vs. First Financial Northwest | Northeast Community vs. First Capital | Northeast Community vs. HomeTrust 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |