Correlation Between First Northwest and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both First Northwest and LINKBANCORP 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 LINKBANCORP 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 LINKBANCORP, you can compare the effects of market volatilities on First Northwest and LINKBANCORP 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 LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and LINKBANCORP.
Diversification Opportunities for First Northwest and LINKBANCORP
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and LINKBANCORP is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP 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 LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of First Northwest i.e., First Northwest and LINKBANCORP go up and down completely randomly.
Pair Corralation between First Northwest and LINKBANCORP
Given the investment horizon of 90 days First Northwest is expected to generate 1.04 times less return on investment than LINKBANCORP. But when comparing it to its historical volatility, First Northwest Bancorp is 1.33 times less risky than LINKBANCORP. It trades about 0.37 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 655.00 in LINKBANCORP on August 28, 2024 and sell it today you would earn a total of 108.00 from holding LINKBANCORP or generate 16.49% 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. LINKBANCORP
Performance |
| Timeline |
| First Northwest Bancorp |
| LINKBANCORP |
First Northwest and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and LINKBANCORP
The main advantage of trading using opposite First Northwest and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP's long position.| First Northwest vs. Fifth Third Bancorp | First Northwest vs. Zions Bancorporation | First Northwest vs. Huntington Bancshares Incorporated | First Northwest vs. Comerica |
| LINKBANCORP vs. Home Federal Bancorp | LINKBANCORP vs. Lake Shore Bancorp | LINKBANCORP vs. Community West Bancshares | LINKBANCORP vs. Magyar 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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