Correlation Between First Foundation and HomeStreet

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

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

Diversification Opportunities for First Foundation and HomeStreet

0.48

Correlation Coefficient

First Foundation  HomeStreet

Very weak diversification

The 3 months correlation between First and HomeStreet is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Foundation and HomeStreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeStreet and First Foundation 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 First Foundation are associated (or correlated) with HomeStreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeStreet has no effect on the direction of First Foundation i.e., First Foundation and HomeStreet go up and down completely randomly.

Pair Corralation between First Foundation and HomeStreet

Given the investment horizon of 90 days First Foundation is expected to under-perform the HomeStreet. In addition to that, First Foundation is 1.03 times more volatile than HomeStreet. It trades about -0.06 of its total potential returns per unit of risk. HomeStreet is currently generating about 0.08 per unit of volatility. If you would invest  1,175  in HomeStreet on May 2, 2025 and sell it today you would earn a total of  99.00  from holding HomeStreet or generate 8.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

First Foundation  vs.  HomeStreet

First Foundation

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Foundation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

HomeStreet

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HomeStreet are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, HomeStreet may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with First Foundation and HomeStreet

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

The idea behind First Foundation and HomeStreet 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.