Correlation Between HomeTrust Bancshares and First Northwest
Can any of the company-specific risk be diversified away by investing in both HomeTrust Bancshares 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 HomeTrust Bancshares and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeTrust Bancshares and First Northwest Bancorp, you can compare the effects of market volatilities on HomeTrust Bancshares 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 HomeTrust Bancshares with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeTrust Bancshares and First Northwest.
Diversification Opportunities for HomeTrust Bancshares and First Northwest
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HomeTrust and First is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares 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 HomeTrust Bancshares 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 HomeTrust Bancshares 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 HomeTrust Bancshares i.e., HomeTrust Bancshares and First Northwest go up and down completely randomly.
Pair Corralation between HomeTrust Bancshares and First Northwest
Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 5.06 times less return on investment than First Northwest. In addition to that, HomeTrust Bancshares is 1.06 times more volatile than First Northwest Bancorp. It trades about 0.04 of its total potential returns per unit of risk. First Northwest Bancorp is currently generating about 0.22 per unit of volatility. If you would invest 1,037 in First Northwest Bancorp on October 20, 2024 and sell it today you would earn a total of 63.00 from holding First Northwest Bancorp or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeTrust Bancshares vs. First Northwest Bancorp
Performance |
| Timeline |
| HomeTrust Bancshares |
| First Northwest Bancorp |
HomeTrust Bancshares and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeTrust Bancshares and First Northwest
The main advantage of trading using opposite HomeTrust Bancshares and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeTrust Bancshares 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.| HomeTrust Bancshares vs. First Northwest Bancorp | HomeTrust Bancshares vs. Community West Bancshares | HomeTrust Bancshares vs. First Financial Northwest | HomeTrust Bancshares vs. Great Southern Bancorp |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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