Correlation Between Northway Financial and Private Bancorp

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

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

Diversification Opportunities for Northway Financial and Private Bancorp

0.0

Correlation Coefficient

Northway Financial  Private Bancorp

Pay attention - limited upside

The 3 months correlation between Northway and Private is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northway Financial and Private Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Private Bancorp and Northway Financial 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 Northway Financial are associated (or correlated) with Private Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Private Bancorp has no effect on the direction of Northway Financial i.e., Northway Financial and Private Bancorp go up and down completely randomly.

Pair Corralation between Northway Financial and Private Bancorp

If you would invest (100.00) in Northway Financial on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Northway Financial or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Northway Financial  vs.  Private Bancorp of

Northway Financial

Risk-Adjusted Performance

Very Weak

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

Private Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Private Bancorp of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Private Bancorp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Northway Financial and Private Bancorp

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

The idea behind Northway Financial and Private Bancorp of 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.