Correlation Between Pacific Premier and First Interstate

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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

PacificFirstDiversified AwayPacificFirstDiversified Away100%
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 Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Pacific Premier Bancorp  vs.  First Interstate BancSystem

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-505
JavaScript chart by amCharts 3.21.15PPBI FIBK
       Timeline  
Pacific Premier Bancorp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Pacific Premier Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2324252627282930
First Interstate Ban 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days First Interstate BancSystem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, First Interstate is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb30313233343536

Pacific Premier and First Interstate Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.95-2.21-1.47-0.730.01130.661.342.022.69 0.070.080.090.100.110.120.13
JavaScript chart by amCharts 3.21.15PPBI FIBK
       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.
The idea behind Pacific Premier Bancorp and First Interstate BancSystem pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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