Correlation Between First Financial and Origin Bancorp

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

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

Diversification Opportunities for First Financial and Origin Bancorp

0.18

Correlation Coefficient

First Financial  Origin Bancorp

Average diversification

The 3 months correlation between First and Origin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and Origin Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Bancorp and First 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 First Financial Northwest are associated (or correlated) with Origin Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Bancorp has no effect on the direction of First Financial i.e., First Financial and Origin Bancorp go up and down completely randomly.

Pair Corralation between First Financial and Origin Bancorp

If you would invest  2,861  in Origin Bancorp on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Origin Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

First Financial Northwest  vs.  Origin Bancorp

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.

Origin Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Origin Bancorp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First Financial and Origin Bancorp

The main advantage of trading using opposite First Financial and Origin Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial position performs unexpectedly, Origin Bancorp 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 Origin Bancorp will offset losses from the drop in Origin Bancorp's long position.

The idea behind First Financial Northwest and Origin Bancorp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.