Correlation Between First Financial and Richmond Mutual
Can any of the company-specific risk be diversified away by investing in both First Financial and Richmond Mutual 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 Richmond Mutual 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 Richmond Mutual Bancorporation, you can compare the effects of market volatilities on First Financial and Richmond Mutual 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 Richmond Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Richmond Mutual.
Diversification Opportunities for First Financial and Richmond Mutual
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Richmond is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and Richmond Mutual Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richmond Mutual Banc 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 Richmond Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richmond Mutual Banc has no effect on the direction of First Financial i.e., First Financial and Richmond Mutual go up and down completely randomly.
Pair Corralation between First Financial and Richmond Mutual
Given the investment horizon of 90 days First Financial Northwest is expected to generate 1.36 times more return on investment than Richmond Mutual. However, First Financial is 1.36 times more volatile than Richmond Mutual Bancorporation. It trades about 0.05 of its potential returns per unit of risk. Richmond Mutual Bancorporation is currently generating about 0.03 per unit of risk. If you would invest 1,412 in First Financial Northwest on August 30, 2024 and sell it today you would earn a total of 858.00 from holding First Financial Northwest or generate 60.76% 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. Richmond Mutual Bancorp.
Performance |
| Timeline |
| First Financial Northwest |
| Richmond Mutual Banc |
First Financial and Richmond Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Richmond Mutual
The main advantage of trading using opposite First Financial and Richmond Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Richmond Mutual 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 Richmond Mutual will offset losses from the drop in Richmond Mutual'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 |
| Richmond Mutual vs. Rhinebeck Bancorp | Richmond Mutual vs. Magyar Bancorp | Richmond Mutual vs. Community West Bancshares | Richmond Mutual vs. First Financial Northwest |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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