Correlation Between Finward Bancorp and Northeast Community
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Northeast Community 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 Northeast Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and Northeast Community Bancorp, you can compare the effects of market volatilities on Finward Bancorp and Northeast Community 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 Northeast Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Northeast Community.
Diversification Opportunities for Finward Bancorp and Northeast Community
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Finward and Northeast is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Northeast Community Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Community 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 Northeast Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Community has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Northeast Community go up and down completely randomly.
Pair Corralation between Finward Bancorp and Northeast Community
Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the Northeast Community. But the stock apears to be less risky and, when comparing its historical volatility, Finward Bancorp is 2.56 times less risky than Northeast Community. The stock trades about -0.04 of its potential returns per unit of risk. The Northeast Community Bancorp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,682 in Northeast Community Bancorp on August 31, 2024 and sell it today you would earn a total of 326.00 from holding Northeast Community Bancorp or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finward Bancorp vs. Northeast Community Bancorp
Performance |
| Timeline |
| Finward Bancorp |
| Northeast Community |
Finward Bancorp and Northeast Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and Northeast Community
The main advantage of trading using opposite Finward Bancorp and Northeast Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, Northeast Community 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 Northeast Community will offset losses from the drop in Northeast Community'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 |
| Northeast Community vs. Community West Bancshares | Northeast Community vs. First Financial Northwest | Northeast Community vs. First Capital | Northeast Community vs. HomeTrust 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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