Correlation Between Partners Bancorp and First Financial
Can any of the company-specific risk be diversified away by investing in both Partners Bancorp and First 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 Partners Bancorp and First Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Partners Bancorp and First Financial Northwest, you can compare the effects of market volatilities on Partners Bancorp and First 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 Partners Bancorp with a short position of First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Partners Bancorp and First Financial.
Diversification Opportunities for Partners Bancorp and First Financial
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Partners and First is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Partners Bancorp and First Financial Northwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Northwest and Partners 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 Partners Bancorp are associated (or correlated) with First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Northwest has no effect on the direction of Partners Bancorp i.e., Partners Bancorp and First Financial go up and down completely randomly.
Pair Corralation between Partners Bancorp and First Financial
Given the investment horizon of 90 days Partners Bancorp is expected to under-perform the First Financial. In addition to that, Partners Bancorp is 1.01 times more volatile than First Financial Northwest. It trades about -0.05 of its total potential returns per unit of risk. First Financial Northwest is currently generating about 0.05 per unit of volatility. If you would invest 1,429 in First Financial Northwest on August 28, 2024 and sell it today you would earn a total of 838.00 from holding First Financial Northwest or generate 58.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 28.78% |
| Values | Daily Returns |
Partners Bancorp vs. First Financial Northwest
Performance |
| Timeline |
| Partners Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Financial Northwest |
Partners Bancorp and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Partners Bancorp and First Financial
The main advantage of trading using opposite Partners Bancorp and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Partners Bancorp position performs unexpectedly, First 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 First Financial will offset losses from the drop in First Financial's long position.| Partners Bancorp vs. Home Federal Bancorp | Partners Bancorp vs. Magyar Bancorp | Partners Bancorp vs. Community West Bancshares | Partners Bancorp vs. Lake Shore Bancorp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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