Correlation Between First Northwest and Investar Holding
Can any of the company-specific risk be diversified away by investing in both First Northwest and Investar 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 Investar 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 Investar Holding Corp, you can compare the effects of market volatilities on First Northwest and Investar 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 Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Investar Holding.
Diversification Opportunities for First Northwest and Investar Holding
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Investar is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of First Northwest i.e., First Northwest and Investar Holding go up and down completely randomly.
Pair Corralation between First Northwest and Investar Holding
Given the investment horizon of 90 days First Northwest Bancorp is expected to under-perform the Investar Holding. But the stock apears to be less risky and, when comparing its historical volatility, First Northwest Bancorp is 1.18 times less risky than Investar Holding. The stock trades about -0.01 of its potential returns per unit of risk. The Investar Holding Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,044 in Investar Holding Corp on August 24, 2024 and sell it today you would earn a total of 295.00 from holding Investar Holding Corp or generate 14.43% 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. Investar Holding Corp
Performance |
| Timeline |
| First Northwest Bancorp |
| Investar Holding Corp |
First Northwest and Investar Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and Investar Holding
The main advantage of trading using opposite First Northwest and Investar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Investar 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 Investar Holding will offset losses from the drop in Investar Holding's long position.| First Northwest vs. Home Federal Bancorp | First Northwest vs. First Financial Northwest | First Northwest vs. First Capital | First Northwest vs. Community West Bancshares |
| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
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.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |