Correlation Between First Northwest and Plumas Bancorp
Can any of the company-specific risk be diversified away by investing in both First Northwest and Plumas 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 Plumas 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 Plumas Bancorp, you can compare the effects of market volatilities on First Northwest and Plumas 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 Plumas Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Plumas Bancorp.
Diversification Opportunities for First Northwest and Plumas Bancorp
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Plumas is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Plumas Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumas 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 Plumas Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumas Bancorp has no effect on the direction of First Northwest i.e., First Northwest and Plumas Bancorp go up and down completely randomly.
Pair Corralation between First Northwest and Plumas Bancorp
Given the investment horizon of 90 days First Northwest Bancorp is expected to generate 0.97 times more return on investment than Plumas Bancorp. However, First Northwest Bancorp is 1.03 times less risky than Plumas Bancorp. It trades about 0.36 of its potential returns per unit of risk. Plumas Bancorp is currently generating about 0.3 per unit of risk. If you would invest 1,006 in First Northwest Bancorp on August 28, 2024 and sell it today you would earn a total of 163.00 from holding First Northwest Bancorp or generate 16.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Northwest Bancorp vs. Plumas Bancorp
Performance |
| Timeline |
| First Northwest Bancorp |
| Plumas Bancorp |
First Northwest and Plumas Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and Plumas Bancorp
The main advantage of trading using opposite First Northwest and Plumas Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Plumas 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 Plumas Bancorp will offset losses from the drop in Plumas Bancorp's long position.| First Northwest vs. Fifth Third Bancorp | First Northwest vs. Huntington Bancshares Incorporated | First Northwest vs. Comerica | First Northwest vs. MT Bank |
| Plumas Bancorp vs. Home Federal Bancorp | Plumas Bancorp vs. First Northwest Bancorp | Plumas Bancorp vs. Lake Shore Bancorp | Plumas Bancorp vs. Community West 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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