Correlation Between Northfield Bancorp and Financial Institutions
Can any of the company-specific risk be diversified away by investing in both Northfield Bancorp and Financial Institutions 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 Northfield Bancorp and Financial Institutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northfield Bancorp and Financial Institutions, you can compare the effects of market volatilities on Northfield Bancorp and Financial Institutions 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 Northfield Bancorp with a short position of Financial Institutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northfield Bancorp and Financial Institutions.
Diversification Opportunities for Northfield Bancorp and Financial Institutions
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northfield and Financial is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Northfield Bancorp and Financial Institutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Institutions and Northfield Bancorp 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 Northfield Bancorp are associated (or correlated) with Financial Institutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Institutions has no effect on the direction of Northfield Bancorp i.e., Northfield Bancorp and Financial Institutions go up and down completely randomly.
Pair Corralation between Northfield Bancorp and Financial Institutions
Given the investment horizon of 90 days Northfield Bancorp is expected to generate 1.18 times more return on investment than Financial Institutions. However, Northfield Bancorp is 1.18 times more volatile than Financial Institutions. It trades about 0.16 of its potential returns per unit of risk. Financial Institutions is currently generating about 0.14 per unit of risk. If you would invest 1,176 in Northfield Bancorp on August 31, 2024 and sell it today you would earn a total of 167.00 from holding Northfield Bancorp or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northfield Bancorp vs. Financial Institutions
Performance |
| Timeline |
| Northfield Bancorp |
| Financial Institutions |
Northfield Bancorp and Financial Institutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northfield Bancorp and Financial Institutions
The main advantage of trading using opposite Northfield Bancorp and Financial Institutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northfield Bancorp position performs unexpectedly, Financial Institutions 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 Financial Institutions will offset losses from the drop in Financial Institutions' long position.| Northfield Bancorp vs. Finward Bancorp | Northfield Bancorp vs. Community West Bancshares | Northfield Bancorp vs. First Financial Northwest | Northfield Bancorp vs. Home Bancorp |
| Financial Institutions vs. First Community | Financial Institutions vs. Community West Bancshares | Financial Institutions vs. First Financial Northwest | Financial Institutions vs. First Northwest 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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