Correlation Between First Northwest and Seacoast Banking
Can any of the company-specific risk be diversified away by investing in both First Northwest and Seacoast Banking 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 Seacoast Banking 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 Seacoast Banking, you can compare the effects of market volatilities on First Northwest and Seacoast Banking 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 Seacoast Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Seacoast Banking.
Diversification Opportunities for First Northwest and Seacoast Banking
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Seacoast is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Seacoast Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seacoast Banking 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 Seacoast Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seacoast Banking has no effect on the direction of First Northwest i.e., First Northwest and Seacoast Banking go up and down completely randomly.
Pair Corralation between First Northwest and Seacoast Banking
Given the investment horizon of 90 days First Northwest Bancorp is expected to under-perform the Seacoast Banking. In addition to that, First Northwest is 1.03 times more volatile than Seacoast Banking. It trades about -0.04 of its total potential returns per unit of risk. Seacoast Banking is currently generating about 0.04 per unit of volatility. If you would invest 2,463 in Seacoast Banking on November 8, 2024 and sell it today you would earn a total of 453.00 from holding Seacoast Banking or generate 18.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Northwest Bancorp vs. Seacoast Banking
Performance |
| Timeline |
| First Northwest Bancorp |
| Seacoast Banking |
First Northwest and Seacoast Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and Seacoast Banking
The main advantage of trading using opposite First Northwest and Seacoast Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Seacoast Banking 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 Seacoast Banking will offset losses from the drop in Seacoast Banking's long position.| First Northwest vs. US Bancorp | First Northwest vs. Truist Financial Corp | First Northwest vs. KeyCorp | First Northwest vs. Citizens Financial Group, |
| Seacoast Banking vs. Home Federal Bancorp | Seacoast Banking vs. First Financial Northwest | Seacoast Banking vs. First Northwest Bancorp | Seacoast Banking vs. First Capital |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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