Correlation Between Bank Utica and First Financial

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

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

Diversification Opportunities for Bank Utica and First Financial

-0.46

Correlation Coefficient

Bank Utica  First Financial

Very good diversification

The 3 months correlation between Bank and First is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank Utica Ny 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 Bank Utica 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 Bank Utica Ny 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 Bank Utica i.e., Bank Utica and First Financial go up and down completely randomly.

Pair Corralation between Bank Utica and First Financial

Assuming the 90 days horizon Bank Utica Ny is expected to generate 1.52 times more return on investment than First Financial. However, Bank Utica is 1.52 times more volatile than First Financial Northwest. It trades about 0.04 of its potential returns per unit of risk. First Financial Northwest is currently generating about 0.04 per unit of risk. If you would invest  34,642  in Bank Utica Ny on October 4, 2024 and sell it today you would earn a total of  14,358  from holding Bank Utica Ny or generate 41.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.13%
Values	Daily Returns

Bank Utica Ny  vs.  First Financial Northwest

Bank Utica Ny

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Utica Ny are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Bank Utica disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 Bank Utica and First Financial

The main advantage of trading using opposite Bank Utica and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Utica 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 Bank Utica Ny 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.