Correlation Between Northwest Bancshares and Capitol Federal
Can any of the company-specific risk be diversified away by investing in both Northwest Bancshares and Capitol Federal 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 Northwest Bancshares and Capitol Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Bancshares and Capitol Federal Financial, you can compare the effects of market volatilities on Northwest Bancshares and Capitol Federal 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 Northwest Bancshares with a short position of Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Bancshares and Capitol Federal.
Diversification Opportunities for Northwest Bancshares and Capitol Federal
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northwest and Capitol is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Bancshares and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial and Northwest 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 Northwest Bancshares are associated (or correlated) with Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of Northwest Bancshares i.e., Northwest Bancshares and Capitol Federal go up and down completely randomly.
Pair Corralation between Northwest Bancshares and Capitol Federal
Assuming the 90 days horizon Northwest Bancshares is expected to generate 0.8 times more return on investment than Capitol Federal. However, Northwest Bancshares is 1.25 times less risky than Capitol Federal. It trades about 0.06 of its potential returns per unit of risk. Capitol Federal Financial is currently generating about 0.03 per unit of risk. If you would invest 935.00 in Northwest Bancshares on September 9, 2024 and sell it today you would earn a total of 385.00 from holding Northwest Bancshares or generate 41.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Bancshares vs. Capitol Federal Financial
Performance |
| Timeline |
| Northwest Bancshares |
| Capitol Federal Financial |
Northwest Bancshares and Capitol Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Bancshares and Capitol Federal
The main advantage of trading using opposite Northwest Bancshares and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Bancshares position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.| Northwest Bancshares vs. Harmony Gold Mining | Northwest Bancshares vs. BRIT AMER TOBACCO | Northwest Bancshares vs. Global Ship Lease | Northwest Bancshares vs. British American Tobacco |
| Capitol Federal vs. Provident Financial Services | Capitol Federal vs. Territorial Bancorp | Capitol Federal vs. Superior Plus Corp | Capitol Federal vs. Origin Agritech |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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