Correlation Between First Northwest and Citizens Holding
Can any of the company-specific risk be diversified away by investing in both First Northwest and Citizens Holding 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 Northwest and Citizens Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Northwest Bancorp and Citizens Holding, you can compare the effects of market volatilities on First Northwest and Citizens Holding 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 Northwest with a short position of Citizens Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Citizens Holding.
Diversification Opportunities for First Northwest and Citizens Holding
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Citizens is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Citizens Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Holding and First Northwest 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 Northwest Bancorp are associated (or correlated) with Citizens Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Holding has no effect on the direction of First Northwest i.e., First Northwest and Citizens Holding go up and down completely randomly.
Pair Corralation between First Northwest and Citizens Holding
If you would invest 1,006 in First Northwest Bancorp on August 29, 2024 and sell it today you would earn a total of 151.00 from holding First Northwest Bancorp or generate 15.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 4.55% |
Values | Daily Returns |
First Northwest Bancorp vs. Citizens Holding
Performance |
Timeline |
First Northwest Bancorp |
Citizens Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Northwest and Citizens Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Northwest and Citizens Holding
The main advantage of trading using opposite First Northwest and Citizens Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Citizens Holding 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 Citizens Holding will offset losses from the drop in Citizens Holding's long position.First Northwest vs. Fifth Third Bancorp | First Northwest vs. Huntington Bancshares Incorporated | First Northwest vs. MT Bank |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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