Correlation Between Liberty Northwest and Touchmark Bancshares
Can any of the company-specific risk be diversified away by investing in both Liberty Northwest and Touchmark Bancshares 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 Touchmark Bancshares 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 Touchmark Bancshares, you can compare the effects of market volatilities on Liberty Northwest and Touchmark Bancshares 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 Touchmark Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Northwest and Touchmark Bancshares.
Diversification Opportunities for Liberty Northwest and Touchmark Bancshares
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Touchmark is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Northwest Bancorp and Touchmark Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchmark Bancshares 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 Touchmark Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchmark Bancshares has no effect on the direction of Liberty Northwest i.e., Liberty Northwest and Touchmark Bancshares go up and down completely randomly.
Pair Corralation between Liberty Northwest and Touchmark Bancshares
Given the investment horizon of 90 days Liberty Northwest Bancorp is expected to generate 0.96 times more return on investment than Touchmark Bancshares. However, Liberty Northwest Bancorp is 1.04 times less risky than Touchmark Bancshares. It trades about 0.04 of its potential returns per unit of risk. Touchmark Bancshares is currently generating about -0.09 per unit of risk. If you would invest 508.00 in Liberty Northwest Bancorp on September 4, 2024 and sell it today you would earn a total of 47.00 from holding Liberty Northwest Bancorp or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Northwest Bancorp vs. Touchmark Bancshares
Performance |
| Timeline |
| Liberty Northwest Bancorp |
| Touchmark Bancshares |
Liberty Northwest and Touchmark Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Northwest and Touchmark Bancshares
The main advantage of trading using opposite Liberty Northwest and Touchmark Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Northwest position performs unexpectedly, Touchmark Bancshares 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 Touchmark Bancshares will offset losses from the drop in Touchmark Bancshares' long position.| Liberty Northwest vs. First Hawaiian | Liberty Northwest vs. Central Pacific Financial | Liberty Northwest vs. Territorial Bancorp | Liberty Northwest vs. Comerica |
| Touchmark Bancshares vs. First Hawaiian | Touchmark Bancshares vs. Central Pacific Financial | Touchmark Bancshares vs. Territorial Bancorp | Touchmark Bancshares vs. Comerica |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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