Correlation Between Westbury Bancorp and First Northwest

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

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

Diversification Opportunities for Westbury Bancorp and First Northwest

0.62

Correlation Coefficient

Westbury Bancorp  First Northwest

Poor diversification

The 3 months correlation between Westbury and First is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Westbury Bancorp 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 Westbury 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 Westbury Bancorp 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 Westbury Bancorp i.e., Westbury Bancorp and First Northwest go up and down completely randomly.

Pair Corralation between Westbury Bancorp and First Northwest

If you would invest  2,840  in Westbury Bancorp on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Westbury Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Westbury Bancorp  vs.  First Northwest Bancorp

Westbury Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westbury Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, Westbury Bancorp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Northwest Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Northwest Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, First Northwest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Westbury Bancorp and First Northwest

The main advantage of trading using opposite Westbury Bancorp and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westbury Bancorp 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.

The idea behind Westbury Bancorp and First Northwest Bancorp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.