Correlation Between Northeast Bancorp and FFD Financial

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

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

Diversification Opportunities for Northeast Bancorp and FFD Financial

0.28

Correlation Coefficient

Northeast Bancorp  FFD Financial

Modest diversification

The 3 months correlation between Northeast and FFD is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Bancorp and FFD Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFD Financial Corp and Northeast 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 Northeast Bancorp are associated (or correlated) with FFD Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFD Financial Corp has no effect on the direction of Northeast Bancorp i.e., Northeast Bancorp and FFD Financial go up and down completely randomly.

Pair Corralation between Northeast Bancorp and FFD Financial

If you would invest  6,989  in Northeast Bancorp on September 15, 2024 and sell it today you would earn a total of  2,861  from holding Northeast Bancorp or generate 40.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Northeast Bancorp  vs.  FFD Financial Corp

Northeast Bancorp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northeast Bancorp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Northeast Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

FFD Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FFD Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, FFD Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Northeast Bancorp and FFD Financial

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

The idea behind Northeast Bancorp and FFD Financial Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.