Correlation Between First Northern and Northway Financial

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

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

Diversification Opportunities for First Northern and Northway Financial

0.0

Correlation Coefficient

First Northern  Northway Financial

Pay attention - limited upside

The 3 months correlation between First and Northway is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Northern Community and Northway Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northway Financial and First Northern 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 Northern Community are associated (or correlated) with Northway Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northway Financial has no effect on the direction of First Northern i.e., First Northern and Northway Financial go up and down completely randomly.

Pair Corralation between First Northern and Northway Financial

If you would invest  995.00  in First Northern Community on December 29, 2024 and sell it today you would earn a total of  24.00  from holding First Northern Community or generate 2.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

First Northern Community  vs.  Northway Financial

First Northern Community

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Northern Community are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Northern is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Northway Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northway Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Northway Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Northern and Northway Financial

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

The idea behind First Northern Community and Northway Financial 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.