Correlation Between First Northwest and William Penn
Can any of the company-specific risk be diversified away by investing in both First Northwest and William Penn 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 William Penn 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 William Penn Bancorp, you can compare the effects of market volatilities on First Northwest and William Penn 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 William Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and William Penn.
Diversification Opportunities for First Northwest and William Penn
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and William is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and William Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Penn 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 William Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Penn Bancorp has no effect on the direction of First Northwest i.e., First Northwest and William Penn go up and down completely randomly.
Pair Corralation between First Northwest and William Penn
Given the investment horizon of 90 days First Northwest Bancorp is expected to generate 1.15 times more return on investment than William Penn. However, First Northwest is 1.15 times more volatile than William Penn Bancorp. It trades about -0.01 of its potential returns per unit of risk. William Penn Bancorp is currently generating about -0.1 per unit of risk. If you would invest 1,098 in First Northwest Bancorp on December 1, 2024 and sell it today you would lose (17.00) from holding First Northwest Bancorp or give up 1.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Northwest Bancorp vs. William Penn Bancorp
Performance |
Timeline |
First Northwest Bancorp |
William Penn Bancorp |
First Northwest and William Penn Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Northwest and William Penn
The main advantage of trading using opposite First Northwest and William Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, William Penn 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 William Penn will offset losses from the drop in William Penn'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 |
William Penn vs. Home Federal Bancorp | William Penn vs. First Financial Northwest | William Penn vs. First Northwest Bancorp | William Penn vs. First Capital |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |