Correlation Between Finward Bancorp and Northfield Bancorp
Can any of the company-specific risk be diversified away by investing in both Finward Bancorp and Northfield 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 Finward Bancorp and Northfield Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finward Bancorp and Northfield Bancorp, you can compare the effects of market volatilities on Finward Bancorp and Northfield 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 Finward Bancorp with a short position of Northfield Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finward Bancorp and Northfield Bancorp.
Diversification Opportunities for Finward Bancorp and Northfield Bancorp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Finward and Northfield is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Finward Bancorp and Northfield Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northfield 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 Northfield Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northfield Bancorp has no effect on the direction of Finward Bancorp i.e., Finward Bancorp and Northfield Bancorp go up and down completely randomly.
Pair Corralation between Finward Bancorp and Northfield Bancorp
Given the investment horizon of 90 days Finward Bancorp is expected to under-perform the Northfield Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Finward Bancorp is 4.03 times less risky than Northfield Bancorp. The stock trades about -0.07 of its potential returns per unit of risk. The Northfield Bancorp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,186 in Northfield Bancorp on August 28, 2024 and sell it today you would earn a total of 201.00 from holding Northfield Bancorp or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finward Bancorp vs. Northfield Bancorp
Performance |
| Timeline |
| Finward Bancorp |
| Northfield Bancorp |
Finward Bancorp and Northfield Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finward Bancorp and Northfield Bancorp
The main advantage of trading using opposite Finward Bancorp and Northfield Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finward Bancorp position performs unexpectedly, Northfield 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 Northfield Bancorp will offset losses from the drop in Northfield Bancorp'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 |
| Northfield Bancorp vs. Finward Bancorp | Northfield Bancorp vs. Community West Bancshares | Northfield Bancorp vs. First Financial Northwest | Northfield Bancorp vs. Home 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 Stocks Directory module to find actively traded stocks across global markets.
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