Correlation Between First Northwest and Western New
Can any of the company-specific risk be diversified away by investing in both First Northwest and Western New 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 Western New 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 Western New England, you can compare the effects of market volatilities on First Northwest and Western New 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 Western New. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and Western New.
Diversification Opportunities for First Northwest and Western New
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Western is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and Western New England in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western New England 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 Western New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western New England has no effect on the direction of First Northwest i.e., First Northwest and Western New go up and down completely randomly.
Pair Corralation between First Northwest and Western New
Given the investment horizon of 90 days First Northwest Bancorp is expected to under-perform the Western New. In addition to that, First Northwest is 1.18 times more volatile than Western New England. It trades about -0.12 of its total potential returns per unit of risk. Western New England is currently generating about -0.02 per unit of volatility. If you would invest 879.00 in Western New England on October 15, 2024 and sell it today you would lose (23.00) from holding Western New England or give up 2.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
First Northwest Bancorp vs. Western New England
Performance |
Timeline |
First Northwest Bancorp |
Western New England |
First Northwest and Western New Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Northwest and Western New
The main advantage of trading using opposite First Northwest and Western New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, Western New 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 Western New will offset losses from the drop in Western New'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 |
Western New vs. IF Bancorp | ||
Western New vs. Shore Bancshares | ||
Western New vs. Colony Bankcorp | ||
Western New vs. Investar Holding Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |