Correlation Between First Northwest and Magyar Bancorp
Can any of the company-specific risk be diversified away by investing in both First Northwest and Magyar 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 Magyar 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 Magyar Bancorp, you can compare the effects of market volatilities on First Northwest and Magyar 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 Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Magyar Bancorp.
Diversification Opportunities for First Northwest and Magyar Bancorp
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Magyar is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar 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 Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of First Northwest i.e., First Northwest and Magyar Bancorp go up and down completely randomly.
Pair Corralation between First Northwest and Magyar Bancorp
Given the investment horizon of 90 days First Northwest Bancorp is expected to under-perform the Magyar Bancorp. In addition to that, First Northwest is 1.01 times more volatile than Magyar Bancorp. It trades about -0.15 of its total potential returns per unit of risk. Magyar Bancorp is currently generating about -0.05 per unit of volatility. If you would invest 1,467 in Magyar Bancorp on December 23, 2024 and sell it today you would lose (27.00) from holding Magyar Bancorp or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Northwest Bancorp vs. Magyar Bancorp
Performance |
| Timeline |
| First Northwest Bancorp |
| Magyar Bancorp |
First Northwest and Magyar Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and Magyar Bancorp
The main advantage of trading using opposite First Northwest and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Magyar 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 Magyar Bancorp will offset losses from the drop in Magyar Bancorp'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 |
| Magyar Bancorp vs. Home Federal Bancorp | Magyar Bancorp vs. Community West Bancshares | Magyar Bancorp vs. First Financial Northwest | Magyar Bancorp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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