Correlation Between First Northern and Pinnacle Bank
Can any of the company-specific risk be diversified away by investing in both First Northern and Pinnacle Bank 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 Pinnacle Bank 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 Pinnacle Bank, you can compare the effects of market volatilities on First Northern and Pinnacle Bank 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 Pinnacle Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northern and Pinnacle Bank.
Diversification Opportunities for First Northern and Pinnacle Bank
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Pinnacle is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Northern Community and Pinnacle Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Bank 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 Pinnacle Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Bank has no effect on the direction of First Northern i.e., First Northern and Pinnacle Bank go up and down completely randomly.
Pair Corralation between First Northern and Pinnacle Bank
Given the investment horizon of 90 days First Northern is expected to generate 1.1 times less return on investment than Pinnacle Bank. In addition to that, First Northern is 1.02 times more volatile than Pinnacle Bank. It trades about 0.12 of its total potential returns per unit of risk. Pinnacle Bank is currently generating about 0.13 per unit of volatility. If you would invest 1,550 in Pinnacle Bank on August 25, 2024 and sell it today you would earn a total of 400.00 from holding Pinnacle Bank or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.05% |
| Values | Daily Returns |
First Northern Community vs. Pinnacle Bank
Performance |
| Timeline |
| First Northern Community |
| Pinnacle Bank |
First Northern and Pinnacle Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northern and Pinnacle Bank
The main advantage of trading using opposite First Northern and Pinnacle Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northern position performs unexpectedly, Pinnacle Bank 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 Pinnacle Bank will offset losses from the drop in Pinnacle Bank's long position.| First Northern vs. Community West Bancshares | First Northern vs. Home Bancorp | First Northern vs. CB Financial Services | First Northern vs. Civista Bancshares |
| Pinnacle Bank vs. Standard Bank Group | Pinnacle Bank vs. PSB Holdings | Pinnacle Bank vs. United Overseas Bank | Pinnacle Bank 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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