Correlation Between Pacific Premier and First Interstate
Can any of the company-specific risk be diversified away by investing in both Pacific Premier and First Interstate 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 Pacific Premier and First Interstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Premier Bancorp and First Interstate BancSystem, you can compare the effects of market volatilities on Pacific Premier and First Interstate 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 Pacific Premier with a short position of First Interstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Premier and First Interstate.
Diversification Opportunities for Pacific Premier and First Interstate
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pacific and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Premier Bancorp and First Interstate BancSystem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Interstate Ban and Pacific Premier 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 Pacific Premier Bancorp are associated (or correlated) with First Interstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Interstate Ban has no effect on the direction of Pacific Premier i.e., Pacific Premier and First Interstate go up and down completely randomly.
Pair Corralation between Pacific Premier and First Interstate
Given the investment horizon of 90 days Pacific Premier Bancorp is expected to generate 1.05 times more return on investment than First Interstate. However, Pacific Premier is 1.05 times more volatile than First Interstate BancSystem. It trades about 0.12 of its potential returns per unit of risk. First Interstate BancSystem is currently generating about 0.04 per unit of risk. If you would invest 2,433 in Pacific Premier Bancorp on November 21, 2024 and sell it today you would earn a total of 93.00 from holding Pacific Premier Bancorp or generate 3.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pacific Premier Bancorp vs. First Interstate BancSystem
Performance |
Timeline |
Pacific Premier Bancorp |
First Interstate Ban |
Pacific Premier and First Interstate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pacific Premier and First Interstate
The main advantage of trading using opposite Pacific Premier and First Interstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Premier position performs unexpectedly, First Interstate 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 Interstate will offset losses from the drop in First Interstate's long position.Pacific Premier vs. Community West Bancshares | ||
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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