Correlation Between First Northwest and Catalyst Bancorp
Can any of the company-specific risk be diversified away by investing in both First Northwest and Catalyst 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 Northwest and Catalyst Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Northwest Bancorp and Catalyst Bancorp, you can compare the effects of market volatilities on First Northwest and Catalyst 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 Northwest with a short position of Catalyst Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Catalyst Bancorp.
Diversification Opportunities for First Northwest and Catalyst Bancorp
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Catalyst is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Catalyst Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Bancorp and First Northwest 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 Northwest Bancorp are associated (or correlated) with Catalyst Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Bancorp has no effect on the direction of First Northwest i.e., First Northwest and Catalyst Bancorp go up and down completely randomly.
Pair Corralation between First Northwest and Catalyst Bancorp
Given the investment horizon of 90 days First Northwest Bancorp is expected to under-perform the Catalyst Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, First Northwest Bancorp is 1.74 times less risky than Catalyst Bancorp. The stock trades about -0.42 of its potential returns per unit of risk. The Catalyst Bancorp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,165 in Catalyst Bancorp on October 13, 2024 and sell it today you would lose (8.00) from holding Catalyst Bancorp or give up 0.69% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.0% |
Values | Daily Returns |
First Northwest Bancorp vs. Catalyst Bancorp
Performance |
Timeline |
First Northwest Bancorp |
Catalyst Bancorp |
First Northwest and Catalyst Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Northwest and Catalyst Bancorp
The main advantage of trading using opposite First Northwest and Catalyst Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Catalyst 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 Catalyst Bancorp will offset losses from the drop in Catalyst Bancorp's long position.First Northwest vs. Home Federal Bancorp | First Northwest vs. First Financial Northwest | First Northwest vs. First Capital | First Northwest vs. Community West Bancshares |
Catalyst Bancorp vs. SVB T Corp | Catalyst Bancorp vs. First Capital | Catalyst Bancorp vs. Pioneer Bankcorp | Catalyst Bancorp vs. Liberty Northwest Bancorp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |