Correlation Between NYSE Composite and First Western
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and First Western 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 NYSE Composite and First Western into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and First Western Financial, you can compare the effects of market volatilities on NYSE Composite and First Western 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 NYSE Composite with a short position of First Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and First Western.
Diversification Opportunities for NYSE Composite and First Western
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and First Western Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Western Financial and NYSE Composite 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 NYSE Composite are associated (or correlated) with First Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Western Financial has no effect on the direction of NYSE Composite i.e., NYSE Composite and First Western go up and down completely randomly.
Pair Corralation between NYSE Composite and First Western
Assuming the 90 days trading horizon NYSE Composite is expected to generate 6.51 times less return on investment than First Western. But when comparing it to its historical volatility, NYSE Composite is 5.26 times less risky than First Western. It trades about 0.21 of its potential returns per unit of risk. First Western Financial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,768 in First Western Financial on November 18, 2024 and sell it today you would earn a total of 314.00 from holding First Western Financial or generate 17.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. First Western Financial
Performance |
| Timeline |
NYSE Composite and First Western Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
First Western Financial
Pair trading matchups for First Western
Pair Trading with NYSE Composite and First Western
The main advantage of trading using opposite NYSE Composite and First Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, First Western 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 First Western will offset losses from the drop in First Western's long position.| NYSE Composite vs. Zhihu Inc ADR | NYSE Composite vs. Allied Gaming Entertainment | NYSE Composite vs. Asure Software | NYSE Composite vs. SohuCom |
| First Western vs. Home Federal Bancorp | First Western vs. First Financial Northwest | First Western vs. First Northwest Bancorp | First Western vs. First Capital |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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