Correlation Between WTB Financial and First Sound
Can any of the company-specific risk be diversified away by investing in both WTB Financial and First Sound 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 WTB Financial and First Sound into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WTB Financial and First Sound Bank, you can compare the effects of market volatilities on WTB Financial and First Sound 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 WTB Financial with a short position of First Sound. Check out your portfolio center. Please also check ongoing floating volatility patterns of WTB Financial and First Sound.
Diversification Opportunities for WTB Financial and First Sound
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WTB and First is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding WTB Financial and First Sound Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Sound Bank and WTB Financial 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 WTB Financial are associated (or correlated) with First Sound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Sound Bank has no effect on the direction of WTB Financial i.e., WTB Financial and First Sound go up and down completely randomly.
Pair Corralation between WTB Financial and First Sound
Assuming the 90 days horizon WTB Financial is expected to generate 10.35 times less return on investment than First Sound. But when comparing it to its historical volatility, WTB Financial is 2.89 times less risky than First Sound. It trades about 0.02 of its potential returns per unit of risk. First Sound Bank is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 390.00 in First Sound Bank on September 2, 2024 and sell it today you would earn a total of 280.00 from holding First Sound Bank or generate 71.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 59.64% |
| Values | Daily Returns |
WTB Financial vs. First Sound Bank
Performance |
| Timeline |
| WTB Financial |
| First Sound Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WTB Financial and First Sound Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WTB Financial and First Sound
The main advantage of trading using opposite WTB Financial and First Sound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WTB Financial position performs unexpectedly, First Sound 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 Sound will offset losses from the drop in First Sound's long position.| WTB Financial vs. Pioneer Bankcorp | WTB Financial vs. Liberty Northwest Bancorp | WTB Financial vs. First Community | WTB Financial vs. Coeur dAlene Bancorp |
| First Sound vs. Rhinebeck Bancorp | First Sound vs. Magyar Bancorp | First Sound vs. Community West Bancshares | First Sound vs. First Financial Northwest |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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