Correlation Between First Interstate and Camden National

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

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

Diversification Opportunities for First Interstate and Camden National

0.98

Correlation Coefficient

First Interstate  Camden National

Almost no diversification

The 3 months correlation between First and Camden is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Interstate BancSystem and Camden National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden National and First Interstate 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 Interstate BancSystem are associated (or correlated) with Camden National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden National has no effect on the direction of First Interstate i.e., First Interstate and Camden National go up and down completely randomly.

Pair Corralation between First Interstate and Camden National

Given the investment horizon of 90 days First Interstate BancSystem is expected to under-perform the Camden National. In addition to that, First Interstate is 1.44 times more volatile than Camden National. It trades about -0.07 of its total potential returns per unit of risk. Camden National is currently generating about -0.08 per unit of volatility. If you would invest  4,391  in Camden National on February 3, 2025 and sell it today you would lose (432.00) from holding Camden National or give up 9.84% of portfolio value over 90 days.

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

First Interstate BancSystem  vs.  Camden National

First Interstate Ban

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Interstate BancSystem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Camden National

Risk-Adjusted Performance

Very Weak

Over the last 90 days Camden National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with First Interstate and Camden National

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

The idea behind First Interstate BancSystem and Camden National 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.