Correlation Between Primis Financial and Northrim BanCorp
Can any of the company-specific risk be diversified away by investing in both Primis Financial and Northrim 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 Primis Financial and Northrim BanCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primis Financial Corp and Northrim BanCorp, you can compare the effects of market volatilities on Primis Financial and Northrim 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 Primis Financial with a short position of Northrim BanCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primis Financial and Northrim BanCorp.
Diversification Opportunities for Primis Financial and Northrim BanCorp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Primis and Northrim is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Primis Financial Corp and Northrim BanCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northrim BanCorp and Primis Financial 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 Primis Financial Corp are associated (or correlated) with Northrim BanCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northrim BanCorp has no effect on the direction of Primis Financial i.e., Primis Financial and Northrim BanCorp go up and down completely randomly.
Pair Corralation between Primis Financial and Northrim BanCorp
Given the investment horizon of 90 days Primis Financial is expected to generate 2.81 times less return on investment than Northrim BanCorp. But when comparing it to its historical volatility, Primis Financial Corp is 1.22 times less risky than Northrim BanCorp. It trades about 0.15 of its potential returns per unit of risk. Northrim BanCorp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 6,666 in Northrim BanCorp on August 28, 2024 and sell it today you would earn a total of 2,142 from holding Northrim BanCorp or generate 32.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primis Financial Corp vs. Northrim BanCorp
Performance |
| Timeline |
| Primis Financial Corp |
| Northrim BanCorp |
Primis Financial and Northrim BanCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primis Financial and Northrim BanCorp
The main advantage of trading using opposite Primis Financial and Northrim BanCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primis Financial position performs unexpectedly, Northrim 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 Northrim BanCorp will offset losses from the drop in Northrim BanCorp's long position.| Primis Financial vs. Affinity Bancshares | Primis Financial vs. Home Federal Bancorp | Primis Financial vs. Community West Bancshares | Primis Financial vs. Investar Holding Corp |
| Northrim BanCorp vs. Peoples Bancorp | Northrim BanCorp vs. Eagle Bancorp | Northrim BanCorp vs. United Bankshares | Northrim BanCorp vs. Pacific Premier 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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