Correlation Between High Country and First Niles

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

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

Diversification Opportunities for High Country and First Niles

-0.12

Correlation Coefficient

High Country  First Niles

Good diversification

The 3 months correlation between High and First is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding High Country Bancorp and First Niles Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Niles Financial and High Country 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 High Country Bancorp are associated (or correlated) with First Niles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Niles Financial has no effect on the direction of High Country i.e., High Country and First Niles go up and down completely randomly.

Pair Corralation between High Country and First Niles

Given the investment horizon of 90 days High Country Bancorp is expected to generate 6.44 times more return on investment than First Niles. However, High Country is 6.44 times more volatile than First Niles Financial. It trades about 0.02 of its potential returns per unit of risk. First Niles Financial is currently generating about -0.21 per unit of risk. If you would invest  3,800  in High Country Bancorp on September 20, 2024 and sell it today you would earn a total of  0.00  from holding High Country Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.1%
Values	Daily Returns

High Country Bancorp  vs.  First Niles Financial

High Country Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days High Country Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, High Country is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

First Niles Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Niles Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, First Niles is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with High Country and First Niles

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

The idea behind High Country Bancorp and First Niles Financial 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 Stocks Directory module to find actively traded stocks across global markets.