Correlation Between First Sound and WTB Financial
Can any of the company-specific risk be diversified away by investing in both First Sound and WTB Financial 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 Sound and WTB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Sound Bank and WTB Financial, you can compare the effects of market volatilities on First Sound and WTB Financial 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 Sound with a short position of WTB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Sound and WTB Financial.
Diversification Opportunities for First Sound and WTB Financial
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and WTB is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding First Sound Bank and WTB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WTB Financial and First Sound 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 Sound Bank are associated (or correlated) with WTB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WTB Financial has no effect on the direction of First Sound i.e., First Sound and WTB Financial go up and down completely randomly.
Pair Corralation between First Sound and WTB Financial
If you would invest 30,600 in WTB Financial on November 3, 2024 and sell it today you would earn a total of 200.00 from holding WTB Financial or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
First Sound Bank vs. WTB Financial
Performance |
| Timeline |
| First Sound Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| WTB Financial |
First Sound and WTB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Sound and WTB Financial
The main advantage of trading using opposite First Sound and WTB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Sound position performs unexpectedly, WTB Financial 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 WTB Financial will offset losses from the drop in WTB Financial's long position.| First Sound vs. Rhinebeck Bancorp | First Sound vs. Magyar Bancorp | First Sound vs. Community West Bancshares | First Sound vs. First Financial Northwest |
| WTB Financial vs. Pioneer Bankcorp | WTB Financial vs. Liberty Northwest Bancorp | WTB Financial vs. First Community | WTB Financial vs. Coeur dAlene 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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