Correlation Between Broadway Financial and First Northwest

Can any of the company-specific risk be diversified away by investing in both Broadway 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 Broadway 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 Broadway Financial and First Northwest Bancorp, you can compare the effects of market volatilities on Broadway 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 Broadway Financial with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadway Financial and First Northwest.

Diversification Opportunities for Broadway Financial and First Northwest

-0.4

Correlation Coefficient

Broadway Financial  First Northwest

Very good diversification

The 3 months correlation between Broadway and First is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Broadway 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 Broadway 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 Broadway 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 Broadway Financial i.e., Broadway Financial and First Northwest go up and down completely randomly.

Pair Corralation between Broadway Financial and First Northwest

Given the investment horizon of 90 days Broadway Financial is expected to under-perform the First Northwest. But the stock apears to be less risky and, when comparing its historical volatility, Broadway Financial is 1.13 times less risky than First Northwest. The stock trades about -0.26 of its potential returns per unit of risk. The First Northwest Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  783.00  in First Northwest Bancorp on August 5, 2025 and sell it today you would earn a total of  124.00  from holding First Northwest Bancorp or generate 15.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.13%
Values	Daily Returns

Broadway Financial  vs.  First Northwest Bancorp

Broadway Financial

Risk-Adjusted Performance

Weakest

Over the last 90 days Broadway Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

First Northwest Bancorp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Northwest Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, First Northwest sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Broadway Financial and First Northwest

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

The idea behind Broadway Financial 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.