Correlation Between AMB Financial and First Financial

Can any of the company-specific risk be diversified away by investing in both AMB Financial 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 AMB Financial and First Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMB Financial Corp and First Financial Northwest, you can compare the effects of market volatilities on AMB Financial 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 AMB Financial with a short position of First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMB Financial and First Financial.

Diversification Opportunities for AMB Financial and First Financial

0.0

Correlation Coefficient

AMB Financial  First Financial

Pay attention - limited upside

The 3 months correlation between AMB and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AMB Financial Corp 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 AMB 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 AMB Financial Corp 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 AMB Financial i.e., AMB Financial and First Financial go up and down completely randomly.

Pair Corralation between AMB Financial and First Financial

Given the investment horizon of 90 days AMB Financial Corp is expected to under-perform the First Financial. But the pink sheet apears to be less risky and, when comparing its historical volatility, AMB Financial Corp is 1.71 times less risky than First Financial. The pink sheet trades about -0.02 of its potential returns per unit of risk. The First Financial Northwest is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,423  in First Financial Northwest on October 7, 2024 and sell it today you would earn a total of  727.00  from holding First Financial Northwest or generate 51.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.41%
Values	Daily Returns

AMB Financial Corp  vs.  First Financial Northwest

AMB Financial Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days AMB Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AMB Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

First Financial Northwest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Financial Northwest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, First Financial is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AMB Financial and First Financial

The main advantage of trading using opposite AMB Financial and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMB Financial 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.

The idea behind AMB Financial Corp and First Financial Northwest 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.