Correlation Between First Interstate and Lakeland Financial

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

Diversification Opportunities for First Interstate and Lakeland Financial

0.17

Correlation Coefficient

First Interstate  Lakeland Financial

Average diversification

The 3 months correlation between First and Lakeland is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Interstate BancSystem and Lakeland Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Financial 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 Lakeland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Financial has no effect on the direction of First Interstate i.e., First Interstate and Lakeland Financial go up and down completely randomly.

Pair Corralation between First Interstate and Lakeland Financial

Given the investment horizon of 90 days First Interstate BancSystem is expected to generate 1.16 times more return on investment than Lakeland Financial. However, First Interstate is 1.16 times more volatile than Lakeland Financial. It trades about 0.07 of its potential returns per unit of risk. Lakeland Financial is currently generating about -0.09 per unit of risk. If you would invest  3,201  in First Interstate BancSystem on September 11, 2025 and sell it today you would earn a total of  237.00  from holding First Interstate BancSystem or generate 7.4% return on investment over 90 days.

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

First Interstate BancSystem  vs.  Lakeland Financial

First Interstate Ban

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Interstate BancSystem are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental drivers, First Interstate may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Lakeland Financial

Risk-Adjusted Performance

Weakest

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

Pair Trading with First Interstate and Lakeland Financial

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

The idea behind First Interstate BancSystem and Lakeland Financial 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.