Correlation Between First Niles and High Country

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

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

Diversification Opportunities for First Niles and High Country

-0.12

Correlation Coefficient

First Niles  High Country

Good diversification

The 3 months correlation between First and High is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding First Niles Financial and High Country Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Country Bancorp and First Niles 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 Niles Financial are associated (or correlated) with High Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Country Bancorp has no effect on the direction of First Niles i.e., First Niles and High Country go up and down completely randomly.

Pair Corralation between First Niles and High Country

If you would invest  3,800  in High Country Bancorp on September 20, 2024 and sell it today you would earn a total of  0.00  from holding High Country Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Niles Financial  vs.  High Country Bancorp

First Niles Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Niles Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, First Niles is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

High Country Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Country Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, High Country is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with First Niles and High Country

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

The idea behind First Niles Financial and High Country 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.