Correlation Between First Northwest and Village Bank
Can any of the company-specific risk be diversified away by investing in both First Northwest and Village Bank 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 Village Bank 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 Village Bank and, you can compare the effects of market volatilities on First Northwest and Village Bank 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 Village Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Village Bank.
Diversification Opportunities for First Northwest and Village Bank
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Village is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Village Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Bank 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 Village Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Bank has no effect on the direction of First Northwest i.e., First Northwest and Village Bank go up and down completely randomly.
Pair Corralation between First Northwest and Village Bank
Given the investment horizon of 90 days First Northwest Bancorp is expected to generate 3.48 times more return on investment than Village Bank. However, First Northwest is 3.48 times more volatile than Village Bank and. It trades about 0.32 of its potential returns per unit of risk. Village Bank and is currently generating about 0.31 per unit of risk. If you would invest 1,006 in First Northwest Bancorp on August 29, 2024 and sell it today you would earn a total of 149.00 from holding First Northwest Bancorp or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.87% |
| Values | Daily Returns |
First Northwest Bancorp vs. Village Bank and
Performance |
| Timeline |
| First Northwest Bancorp |
| Village Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
First Northwest and Village Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Northwest and Village Bank
The main advantage of trading using opposite First Northwest and Village Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Village Bank 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 Village Bank will offset losses from the drop in Village Bank'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 |
| Village Bank vs. Prime Meridian Holding | Village Bank vs. William Penn Bancorp | Village Bank vs. Pathfinder Bancorp | Village Bank 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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