Correlation Between First Northwest and ESSA Bancorp
Can any of the company-specific risk be diversified away by investing in both First Northwest and ESSA Bancorp 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 ESSA Bancorp 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 ESSA Bancorp, you can compare the effects of market volatilities on First Northwest and ESSA Bancorp 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 ESSA Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and ESSA Bancorp.
Diversification Opportunities for First Northwest and ESSA Bancorp
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and ESSA is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and ESSA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSA Bancorp 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 ESSA Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSA Bancorp has no effect on the direction of First Northwest i.e., First Northwest and ESSA Bancorp go up and down completely randomly.
Pair Corralation between First Northwest and ESSA Bancorp
Given the investment horizon of 90 days First Northwest Bancorp is expected to generate 0.82 times more return on investment than ESSA Bancorp. However, First Northwest Bancorp is 1.23 times less risky than ESSA Bancorp. It trades about 0.31 of its potential returns per unit of risk. ESSA Bancorp is currently generating about 0.14 per unit of risk. If you would invest 1,006 in First Northwest Bancorp on August 27, 2024 and sell it today you would earn a total of 134.00 from holding First Northwest Bancorp or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Northwest Bancorp vs. ESSA Bancorp
Performance |
| Timeline |
| First Northwest Bancorp |
| ESSA Bancorp |
First Northwest and ESSA Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and ESSA Bancorp
The main advantage of trading using opposite First Northwest and ESSA Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, ESSA Bancorp 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 ESSA Bancorp will offset losses from the drop in ESSA Bancorp's long position.| First Northwest vs. Fifth Third Bancorp | First Northwest vs. Zions Bancorporation | First Northwest vs. Huntington Bancshares Incorporated | First Northwest vs. PNC Financial Services |
| ESSA Bancorp vs. Fifth Third Bancorp | ESSA Bancorp vs. Zions Bancorporation | ESSA Bancorp vs. Huntington Bancshares Incorporated | ESSA Bancorp vs. PNC Financial Services |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |