Correlation Between Northrim BanCorp and FB Financial
Can any of the company-specific risk be diversified away by investing in both Northrim BanCorp and FB Financial 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 FB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northrim BanCorp and FB Financial Corp, you can compare the effects of market volatilities on Northrim BanCorp and FB Financial 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 FB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrim BanCorp and FB Financial.
Diversification Opportunities for Northrim BanCorp and FB Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northrim and FBK is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Northrim BanCorp and FB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FB Financial Corp 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 FB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FB Financial Corp has no effect on the direction of Northrim BanCorp i.e., Northrim BanCorp and FB Financial go up and down completely randomly.
Pair Corralation between Northrim BanCorp and FB Financial
Given the investment horizon of 90 days Northrim BanCorp is expected to generate 1.04 times more return on investment than FB Financial. However, Northrim BanCorp is 1.04 times more volatile than FB Financial Corp. It trades about 0.06 of its potential returns per unit of risk. FB Financial Corp is currently generating about 0.04 per unit of risk. If you would invest 4,787 in Northrim BanCorp on November 19, 2024 and sell it today you would earn a total of 3,613 from holding Northrim BanCorp or generate 75.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northrim BanCorp vs. FB Financial Corp
Performance |
| Timeline |
| Northrim BanCorp |
| FB Financial Corp |
Northrim BanCorp and FB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northrim BanCorp and FB Financial
The main advantage of trading using opposite Northrim BanCorp and FB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrim BanCorp position performs unexpectedly, FB Financial 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 FB Financial will offset losses from the drop in FB Financial's long position.| Northrim BanCorp vs. Peoples Bancorp | Northrim BanCorp vs. Eagle Bancorp | Northrim BanCorp vs. United Bankshares | Northrim BanCorp vs. Pacific Premier Bancorp |
| FB Financial vs. Home Bancorp | FB Financial vs. First Business Financial | FB Financial vs. LINKBANCORP | FB Financial vs. Great Southern 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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