Correlation Between Liberty Northwest and Fentura Financial
Can any of the company-specific risk be diversified away by investing in both Liberty Northwest and Fentura 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 Liberty Northwest and Fentura Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Northwest Bancorp and Fentura Financial, you can compare the effects of market volatilities on Liberty Northwest and Fentura 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 Liberty Northwest with a short position of Fentura Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Northwest and Fentura Financial.
Diversification Opportunities for Liberty Northwest and Fentura Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Fentura is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Northwest Bancorp and Fentura Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fentura Financial and Liberty Northwest 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 Liberty Northwest Bancorp are associated (or correlated) with Fentura Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fentura Financial has no effect on the direction of Liberty Northwest i.e., Liberty Northwest and Fentura Financial go up and down completely randomly.
Pair Corralation between Liberty Northwest and Fentura Financial
Given the investment horizon of 90 days Liberty Northwest Bancorp is expected to under-perform the Fentura Financial. But the otc stock apears to be less risky and, when comparing its historical volatility, Liberty Northwest Bancorp is 2.14 times less risky than Fentura Financial. The otc stock trades about -0.03 of its potential returns per unit of risk. The Fentura Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,250 in Fentura Financial on August 30, 2024 and sell it today you would earn a total of 2,300 from holding Fentura Financial or generate 102.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.4% |
| Values | Daily Returns |
Liberty Northwest Bancorp vs. Fentura Financial
Performance |
| Timeline |
| Liberty Northwest Bancorp |
| Fentura Financial |
Liberty Northwest and Fentura Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Northwest and Fentura Financial
The main advantage of trading using opposite Liberty Northwest and Fentura Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Northwest position performs unexpectedly, Fentura 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 Fentura Financial will offset losses from the drop in Fentura Financial's long position.| Liberty Northwest vs. Israel Discount Bank | Liberty Northwest vs. Baraboo Bancorporation | Liberty Northwest vs. Danske Bank AS | Liberty Northwest vs. Jyske Bank AS |
| Fentura Financial vs. Pioneer Bankcorp | Fentura Financial vs. Liberty Northwest Bancorp | Fentura Financial vs. First Community | Fentura 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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