Correlation Between First Financial and Timberland Bancorp
Can any of the company-specific risk be diversified away by investing in both First Financial and Timberland 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 Timberland 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 Timberland Bancorp, you can compare the effects of market volatilities on First Financial and Timberland 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 Timberland Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and Timberland Bancorp.
Diversification Opportunities for First Financial and Timberland Bancorp
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Timberland is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and Timberland Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timberland 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 Timberland Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timberland Bancorp has no effect on the direction of First Financial i.e., First Financial and Timberland Bancorp go up and down completely randomly.
Pair Corralation between First Financial and Timberland Bancorp
Given the investment horizon of 90 days First Financial Northwest is expected to generate 1.43 times more return on investment than Timberland Bancorp. However, First Financial is 1.43 times more volatile than Timberland Bancorp. It trades about 0.05 of its potential returns per unit of risk. Timberland Bancorp is currently generating about 0.01 per unit of risk. If you would invest 1,362 in First Financial Northwest on September 3, 2024 and sell it today you would earn a total of 898.00 from holding First Financial Northwest or generate 65.93% 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. Timberland Bancorp
Performance |
| Timeline |
| First Financial Northwest |
| Timberland Bancorp |
First Financial and Timberland Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and Timberland Bancorp
The main advantage of trading using opposite First Financial and Timberland Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Timberland 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 Timberland Bancorp will offset losses from the drop in Timberland Bancorp's long position.| First Financial vs. JPMorgan Chase Co | First Financial vs. Citigroup | First Financial vs. Wells Fargo | First Financial vs. Toronto Dominion Bank |
| Timberland Bancorp vs. First Financial Northwest | Timberland Bancorp vs. FVCBankcorp | Timberland Bancorp vs. Community West Bancshares | Timberland Bancorp vs. Sierra 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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