Correlation Between 1st Capital and Liberty Northwest
Can any of the company-specific risk be diversified away by investing in both 1st Capital and Liberty Northwest 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 1st Capital and Liberty Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Capital Bank and Liberty Northwest Bancorp, you can compare the effects of market volatilities on 1st Capital and Liberty Northwest 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 1st Capital with a short position of Liberty Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Capital and Liberty Northwest.
Diversification Opportunities for 1st Capital and Liberty Northwest
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 1st and Liberty is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding 1st Capital Bank and Liberty Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Northwest Bancorp and 1st Capital 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 1st Capital Bank are associated (or correlated) with Liberty Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Northwest Bancorp has no effect on the direction of 1st Capital i.e., 1st Capital and Liberty Northwest go up and down completely randomly.
Pair Corralation between 1st Capital and Liberty Northwest
If you would invest 535.00 in Liberty Northwest Bancorp on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Liberty Northwest Bancorp or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
1st Capital Bank vs. Liberty Northwest Bancorp
Performance |
| Timeline |
| 1st Capital Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
| Liberty Northwest Bancorp |
1st Capital and Liberty Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Capital and Liberty Northwest
The main advantage of trading using opposite 1st Capital and Liberty Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Capital position performs unexpectedly, Liberty Northwest 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 Liberty Northwest will offset losses from the drop in Liberty Northwest's long position.| 1st Capital vs. Pacific Valley Bank | 1st Capital vs. Pinnacle Bank | 1st Capital vs. Santa Cruz County | 1st Capital vs. First Northern Community |
| Liberty Northwest vs. Standard Bank Group | Liberty Northwest vs. PSB Holdings | Liberty Northwest vs. United Overseas Bank | Liberty Northwest vs. Turkiye Garanti Bankasi |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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