Correlation Between First Northern and Katahdin Bankshares
Can any of the company-specific risk be diversified away by investing in both First Northern and Katahdin Bankshares 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 Northern and Katahdin Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Northern Community and Katahdin Bankshares Corp, you can compare the effects of market volatilities on First Northern and Katahdin Bankshares 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 Northern with a short position of Katahdin Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northern and Katahdin Bankshares.
Diversification Opportunities for First Northern and Katahdin Bankshares
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Katahdin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding First Northern Community and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp and First Northern 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 Northern Community are associated (or correlated) with Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of First Northern i.e., First Northern and Katahdin Bankshares go up and down completely randomly.
Pair Corralation between First Northern and Katahdin Bankshares
Given the investment horizon of 90 days First Northern Community is expected to generate 0.3 times more return on investment than Katahdin Bankshares. However, First Northern Community is 3.38 times less risky than Katahdin Bankshares. It trades about -0.16 of its potential returns per unit of risk. Katahdin Bankshares Corp is currently generating about -0.12 per unit of risk. If you would invest 995.00 in First Northern Community on November 2, 2024 and sell it today you would lose (9.00) from holding First Northern Community or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
First Northern Community vs. Katahdin Bankshares Corp
Performance |
| Timeline |
| First Northern Community |
| Katahdin Bankshares Corp |
First Northern and Katahdin Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northern and Katahdin Bankshares
The main advantage of trading using opposite First Northern and Katahdin Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northern position performs unexpectedly, Katahdin Bankshares 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 Katahdin Bankshares will offset losses from the drop in Katahdin Bankshares' long position.| First Northern vs. Community West Bancshares | First Northern vs. Home Bancorp | First Northern vs. CB Financial Services | First Northern vs. Civista Bancshares |
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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 Stocks Directory module to find actively traded stocks across global markets.
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