Correlation Between Tompkins Financial and First Northwest
Can any of the company-specific risk be diversified away by investing in both Tompkins Financial and First Northwest 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 Tompkins Financial and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tompkins Financial and First Northwest Bancorp, you can compare the effects of market volatilities on Tompkins Financial and First Northwest 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 Tompkins Financial with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tompkins Financial and First Northwest.
Diversification Opportunities for Tompkins Financial and First Northwest
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tompkins and First is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Tompkins Financial and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest Bancorp and Tompkins 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 Tompkins Financial are associated (or correlated) with First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of Tompkins Financial i.e., Tompkins Financial and First Northwest go up and down completely randomly.
Pair Corralation between Tompkins Financial and First Northwest
Considering the 90-day investment horizon Tompkins Financial is expected to generate 1.25 times more return on investment than First Northwest. However, Tompkins Financial is 1.25 times more volatile than First Northwest Bancorp. It trades about 0.01 of its potential returns per unit of risk. First Northwest Bancorp is currently generating about -0.03 per unit of risk. If you would invest 7,085 in Tompkins Financial on September 24, 2024 and sell it today you would lose (247.00) from holding Tompkins Financial or give up 3.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Tompkins Financial vs. First Northwest Bancorp
Performance |
Timeline |
Tompkins Financial |
First Northwest Bancorp |
Tompkins Financial and First Northwest Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tompkins Financial and First Northwest
The main advantage of trading using opposite Tompkins Financial and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tompkins Financial position performs unexpectedly, First Northwest 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 Northwest will offset losses from the drop in First Northwest's long position.Tompkins Financial vs. First Northwest Bancorp | Tompkins Financial vs. HomeTrust Bancshares | Tompkins Financial vs. Lake Shore Bancorp |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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