Correlation Between Glacier Bancorp and First Financial

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

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

Diversification Opportunities for Glacier Bancorp and First Financial

0.84

Correlation Coefficient

Glacier Bancorp  First Financial

Very poor diversification

The 3 months correlation between Glacier and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Glacier Bancorp and First Financial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Bancorp and Glacier Bancorp 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 Glacier Bancorp are associated (or correlated) with First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Bancorp has no effect on the direction of Glacier Bancorp i.e., Glacier Bancorp and First Financial go up and down completely randomly.

Pair Corralation between Glacier Bancorp and First Financial

Given the investment horizon of 90 days Glacier Bancorp is expected to under-perform the First Financial. In addition to that, Glacier Bancorp is 1.09 times more volatile than First Financial Bancorp. It trades about -0.17 of its total potential returns per unit of risk. First Financial Bancorp is currently generating about -0.09 per unit of volatility. If you would invest  2,929  in First Financial Bancorp on November 29, 2024 and sell it today you would lose (237.00) from holding First Financial Bancorp or give up 8.09% of portfolio value over 90 days.

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

Glacier Bancorp  vs.  First Financial Bancorp

Glacier Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glacier Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

First Financial Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Financial Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Glacier Bancorp and First Financial

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

The idea behind Glacier Bancorp and First Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..