Correlation Between Glacier Bancorp and First Interstate

Can any of the company-specific risk be diversified away by investing in both Glacier Bancorp and First Interstate 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 Interstate 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 Interstate BancSystem, you can compare the effects of market volatilities on Glacier Bancorp and First Interstate 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 Interstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glacier Bancorp and First Interstate.

Diversification Opportunities for Glacier Bancorp and First Interstate

0.88

Correlation Coefficient

Glacier Bancorp  First Interstate

Very poor diversification

The 3 months correlation between Glacier and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Glacier Bancorp and First Interstate BancSystem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Interstate Ban 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 Interstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Interstate Ban has no effect on the direction of Glacier Bancorp i.e., Glacier Bancorp and First Interstate go up and down completely randomly.

Pair Corralation between Glacier Bancorp and First Interstate

Given the investment horizon of 90 days Glacier Bancorp is expected to under-perform the First Interstate. But the stock apears to be less risky and, when comparing its historical volatility, Glacier Bancorp is 1.06 times less risky than First Interstate. The stock trades about -0.12 of its potential returns per unit of risk. The First Interstate BancSystem is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,205  in First Interstate BancSystem on December 29, 2024 and sell it today you would lose (295.00) from holding First Interstate BancSystem or give up 9.2% 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 Interstate BancSystem

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 April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

First Interstate Ban

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Interstate BancSystem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Glacier Bancorp and First Interstate

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

The idea behind Glacier Bancorp and First Interstate BancSystem 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..