Correlation Between First Northwest and Home Federal
Can any of the company-specific risk be diversified away by investing in both First Northwest and Home Federal 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 Home Federal 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 Home Federal Bancorp, you can compare the effects of market volatilities on First Northwest and Home Federal 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 Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Home Federal.
Diversification Opportunities for First Northwest and Home Federal
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Home is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal 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 Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of First Northwest i.e., First Northwest and Home Federal go up and down completely randomly.
Pair Corralation between First Northwest and Home Federal
Given the investment horizon of 90 days First Northwest Bancorp is expected to under-perform the Home Federal. But the stock apears to be less risky and, when comparing its historical volatility, First Northwest Bancorp is 52.53 times less risky than Home Federal. The stock trades about -0.03 of its potential returns per unit of risk. The Home Federal Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,237 in Home Federal Bancorp on November 2, 2024 and sell it today you would earn a total of 32.00 from holding Home Federal Bancorp or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.26% |
| Values | Daily Returns |
First Northwest Bancorp vs. Home Federal Bancorp
Performance |
| Timeline |
| First Northwest Bancorp |
| Home Federal Bancorp |
First Northwest and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and Home Federal
The main advantage of trading using opposite First Northwest and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Home Federal 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 Home Federal will offset losses from the drop in Home Federal's long position.| First Northwest vs. Home Federal Bancorp | First Northwest vs. Magyar Bancorp | First Northwest vs. First Capital | First Northwest vs. HomeTrust Bancshares |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |