Correlation Between Finward Bancorp and First Northwest
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and First Northwest 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 Finward Bancorp and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and First Northwest Bancorp, you can compare the effects of market volatilities on Finward Bancorp and First Northwest 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 Finward Bancorp with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and First Northwest.
Diversification Opportunities for Finward Bancorp and First Northwest
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Finward and First is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest Bancorp and Finward Bancorp 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 Finward Bancorp are associated (or correlated) with First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and First Northwest go up and down completely randomly.
Pair Corralation between Finward Bancorp and First Northwest
Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the First Northwest. But the stock apears to be less risky and, when comparing its historical volatility, Finward Bancorp is 1.92 times less risky than First Northwest. The stock trades about -0.07 of its potential returns per unit of risk. The First Northwest Bancorp is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,006 in First Northwest Bancorp on August 27, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finward Bancorp vs. First Northwest Bancorp
Performance |
| Timeline |
| Finward Bancorp |
| First Northwest Bancorp |
Finward Bancorp and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and First Northwest
The main advantage of trading using opposite Finward Bancorp and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, First Northwest 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 First Northwest will offset losses from the drop in First Northwest's long position.| Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. Home Federal Bancorp |
| First Northwest vs. Fifth Third Bancorp | First Northwest vs. Zions Bancorporation | First Northwest vs. Huntington Bancshares Incorporated | First Northwest vs. Comerica |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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