Correlation Between NYSE Composite and Northwest Bancshares
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Northwest Bancshares 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 Northwest Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Northwest Bancshares, you can compare the effects of market volatilities on NYSE Composite and Northwest Bancshares 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 Northwest Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Northwest Bancshares.
Diversification Opportunities for NYSE Composite and Northwest Bancshares
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Northwest is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Northwest Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Bancshares 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 Northwest Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Bancshares has no effect on the direction of NYSE Composite i.e., NYSE Composite and Northwest Bancshares go up and down completely randomly.
Pair Corralation between NYSE Composite and Northwest Bancshares
Assuming the 90 days trading horizon NYSE Composite is expected to generate 4.67 times less return on investment than Northwest Bancshares. But when comparing it to its historical volatility, NYSE Composite is 4.92 times less risky than Northwest Bancshares. It trades about 0.19 of its potential returns per unit of risk. Northwest Bancshares is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,312 in Northwest Bancshares on August 25, 2024 and sell it today you would earn a total of 181.00 from holding Northwest Bancshares or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Northwest Bancshares
Performance |
| Timeline |
NYSE Composite and Northwest Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Northwest Bancshares
Pair trading matchups for Northwest Bancshares
Pair Trading with NYSE Composite and Northwest Bancshares
The main advantage of trading using opposite NYSE Composite and Northwest Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Northwest Bancshares 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 Northwest Bancshares will offset losses from the drop in Northwest Bancshares' long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Northwest Bancshares vs. ST Bancorp | Northwest Bancshares vs. CrossFirst Bankshares | Northwest Bancshares vs. Enterprise Financial Services | Northwest Bancshares vs. The First Bancshares, |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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