Correlation Between Hingham Institution and First Northwest
Can any of the company-specific risk be diversified away by investing in both Hingham Institution 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 Hingham Institution and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hingham Institution for and First Northwest Bancorp, you can compare the effects of market volatilities on Hingham Institution 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 Hingham Institution with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hingham Institution and First Northwest.
Diversification Opportunities for Hingham Institution and First Northwest
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hingham and First is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hingham Institution for 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 Hingham Institution 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 Hingham Institution for 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 Hingham Institution i.e., Hingham Institution and First Northwest go up and down completely randomly.
Pair Corralation between Hingham Institution and First Northwest
Given the investment horizon of 90 days Hingham Institution for is expected to under-perform the First Northwest. But the stock apears to be less risky and, when comparing its historical volatility, Hingham Institution for is 1.1 times less risky than First Northwest. The stock trades about -0.06 of its potential returns per unit of risk. The First Northwest Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,038 in First Northwest Bancorp on September 13, 2024 and sell it today you would earn a total of 38.00 from holding First Northwest Bancorp or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hingham Institution for vs. First Northwest Bancorp
Performance |
| Timeline |
| Hingham Institution for |
| First Northwest Bancorp |
Hingham Institution and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hingham Institution and First Northwest
The main advantage of trading using opposite Hingham Institution and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hingham Institution 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.| Hingham Institution vs. First United | Hingham Institution vs. First Community | Hingham Institution vs. Greene County Bancorp | Hingham Institution vs. Community West Bancshares |
| First Northwest vs. Home Federal Bancorp | First Northwest vs. First Financial Northwest | First Northwest vs. First Capital | First Northwest vs. Community West 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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