Correlation Between Shore Bancshares and First Northwest
Can any of the company-specific risk be diversified away by investing in both Shore Bancshares and First Northwest 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 Shore Bancshares and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shore Bancshares and First Northwest Bancorp, you can compare the effects of market volatilities on Shore Bancshares and First Northwest 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 Shore Bancshares with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shore Bancshares and First Northwest.
Diversification Opportunities for Shore Bancshares and First Northwest
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shore and First is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Shore Bancshares and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest Bancorp and Shore Bancshares 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 Shore Bancshares are associated (or correlated) with First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of Shore Bancshares i.e., Shore Bancshares and First Northwest go up and down completely randomly.
Pair Corralation between Shore Bancshares and First Northwest
Given the investment horizon of 90 days Shore Bancshares is expected to generate 1.1 times more return on investment than First Northwest. However, Shore Bancshares is 1.1 times more volatile than First Northwest Bancorp. It trades about 0.0 of its potential returns per unit of risk. First Northwest Bancorp is currently generating about -0.01 per unit of risk. If you would invest 1,778 in Shore Bancshares on September 3, 2024 and sell it today you would lose (133.00) from holding Shore Bancshares or give up 7.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shore Bancshares vs. First Northwest Bancorp
Performance |
| Timeline |
| Shore Bancshares |
| First Northwest Bancorp |
Shore Bancshares and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shore Bancshares and First Northwest
The main advantage of trading using opposite Shore Bancshares and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shore Bancshares position performs unexpectedly, First Northwest 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 Northwest will offset losses from the drop in First Northwest's long position.| Shore Bancshares vs. Home Federal Bancorp | Shore Bancshares vs. IF Bancorp | Shore Bancshares vs. Western New England | Shore Bancshares vs. Colony Bankcorp |
| First Northwest vs. JPMorgan Chase Co | First Northwest vs. Citigroup | First Northwest vs. Wells Fargo | First Northwest vs. Toronto Dominion Bank |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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