Correlation Between First Bancorp and First Northwest
Can any of the company-specific risk be diversified away by investing in both First Bancorp and First 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 First Bancorp and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancorp and First Northwest Bancorp, you can compare the effects of market volatilities on First Bancorp and First 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 First Bancorp with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancorp and First Northwest.
Diversification Opportunities for First Bancorp and First Northwest
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and First is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest Bancorp and First Bancorp 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 Bancorp are associated (or correlated) with First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of First Bancorp i.e., First Bancorp and First Northwest go up and down completely randomly.
Pair Corralation between First Bancorp and First Northwest
Given the investment horizon of 90 days First Bancorp is expected to generate 1.18 times less return on investment than First Northwest. In addition to that, First Bancorp is 2.11 times more volatile than First Northwest Bancorp. It trades about 0.15 of its total potential returns per unit of risk. First Northwest Bancorp is currently generating about 0.37 per unit of volatility. If you would invest 1,006 in First Northwest Bancorp on August 27, 2024 and sell it today you would earn a total of 163.00 from holding First Northwest Bancorp or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Bancorp vs. First Northwest Bancorp
Performance |
| Timeline |
| First Bancorp |
| First Northwest Bancorp |
First Bancorp and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancorp and First Northwest
The main advantage of trading using opposite First Bancorp and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp position performs unexpectedly, First 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 First Northwest will offset losses from the drop in First Northwest's long position.| First Bancorp vs. LINKBANCORP | First Bancorp vs. Bankwell Financial Group | First Bancorp vs. FS Bancorp | First Bancorp vs. Finward Bancorp |
| First Northwest vs. Fifth Third Bancorp | First Northwest vs. Zions Bancorporation | First Northwest vs. Huntington Bancshares Incorporated | First Northwest vs. Comerica |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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