Correlation Between Northrim BanCorp and Employers Holdings
Can any of the company-specific risk be diversified away by investing in both Northrim BanCorp and Employers Holdings 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 Northrim BanCorp and Employers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northrim BanCorp and Employers Holdings, you can compare the effects of market volatilities on Northrim BanCorp and Employers Holdings 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 Northrim BanCorp with a short position of Employers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrim BanCorp and Employers Holdings.
Diversification Opportunities for Northrim BanCorp and Employers Holdings
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Northrim and Employers is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Northrim BanCorp and Employers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Employers Holdings and Northrim 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 Northrim BanCorp are associated (or correlated) with Employers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Employers Holdings has no effect on the direction of Northrim BanCorp i.e., Northrim BanCorp and Employers Holdings go up and down completely randomly.
Pair Corralation between Northrim BanCorp and Employers Holdings
Given the investment horizon of 90 days Northrim BanCorp is expected to generate 1.86 times more return on investment than Employers Holdings. However, Northrim BanCorp is 1.86 times more volatile than Employers Holdings. It trades about 0.29 of its potential returns per unit of risk. Employers Holdings is currently generating about 0.25 per unit of risk. If you would invest 6,651 in Northrim BanCorp on August 30, 2024 and sell it today you would earn a total of 1,906 from holding Northrim BanCorp or generate 28.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northrim BanCorp vs. Employers Holdings
Performance |
| Timeline |
| Northrim BanCorp |
| Employers Holdings |
Northrim BanCorp and Employers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northrim BanCorp and Employers Holdings
The main advantage of trading using opposite Northrim BanCorp and Employers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrim BanCorp position performs unexpectedly, Employers Holdings 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 Employers Holdings will offset losses from the drop in Employers Holdings' long position.| Northrim BanCorp vs. Peoples Bancorp | Northrim BanCorp vs. Eagle Bancorp | Northrim BanCorp vs. United Bankshares | Northrim BanCorp vs. Pacific Premier Bancorp |
| Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title | Employers Holdings vs. Essent Group |
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 Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |