Correlation Between Liberty Northwest and 1st Capital
Can any of the company-specific risk be diversified away by investing in both Liberty Northwest and 1st Capital 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 1st Capital 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 1st Capital Bank, you can compare the effects of market volatilities on Liberty Northwest and 1st Capital 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 1st Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Northwest and 1st Capital.
Diversification Opportunities for Liberty Northwest and 1st Capital
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Liberty and 1st is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Northwest Bancorp and 1st Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Capital Bank 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 1st Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Capital Bank has no effect on the direction of Liberty Northwest i.e., Liberty Northwest and 1st Capital go up and down completely randomly.
Pair Corralation between Liberty Northwest and 1st Capital
Given the investment horizon of 90 days Liberty Northwest Bancorp is expected to under-perform the 1st Capital. But the otc stock apears to be less risky and, when comparing its historical volatility, Liberty Northwest Bancorp is 2.07 times less risky than 1st Capital. The otc stock trades about -0.03 of its potential returns per unit of risk. The 1st Capital Bank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,080 in 1st Capital Bank on August 25, 2024 and sell it today you would earn a total of 320.00 from holding 1st Capital Bank or generate 29.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 69.76% |
| Values | Daily Returns |
Liberty Northwest Bancorp vs. 1st Capital Bank
Performance |
| Timeline |
| Liberty Northwest Bancorp |
| 1st Capital Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
Liberty Northwest and 1st Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Northwest and 1st Capital
The main advantage of trading using opposite Liberty Northwest and 1st Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Northwest position performs unexpectedly, 1st Capital 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 1st Capital will offset losses from the drop in 1st Capital's long position.| Liberty Northwest vs. Standard Bank Group | Liberty Northwest vs. PSB Holdings | Liberty Northwest vs. United Overseas Bank | Liberty Northwest vs. Turkiye Garanti Bankasi |
| 1st Capital vs. Pacific Valley Bank | 1st Capital vs. Pinnacle Bank | 1st Capital vs. Santa Cruz County | 1st Capital vs. First Northern Community |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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