Correlation Between First Interstate and Tri County

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

Diversification Opportunities for First Interstate and Tri County

0.66

Correlation Coefficient

First Interstate  Tri County

Poor diversification

The 3 months correlation between First and Tri is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding First Interstate BancSystem and Tri County Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri County 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 Tri County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri County Financial has no effect on the direction of First Interstate i.e., First Interstate and Tri County go up and down completely randomly.

Pair Corralation between First Interstate and Tri County

Given the investment horizon of 90 days First Interstate BancSystem is expected to generate 3.44 times more return on investment than Tri County. However, First Interstate is 3.44 times more volatile than Tri County Financial Group. It trades about 0.15 of its potential returns per unit of risk. Tri County Financial Group is currently generating about 0.18 per unit of risk. If you would invest  2,604  in First Interstate BancSystem on May 22, 2025 and sell it today you would earn a total of  412.00  from holding First Interstate BancSystem or generate 15.82% return on investment over 90 days.

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

First Interstate BancSystem  vs.  Tri County Financial Group

First Interstate Ban

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Interstate BancSystem are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental drivers, First Interstate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Tri County Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tri County Financial Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Tri County is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Interstate and Tri County

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

The idea behind First Interstate BancSystem and Tri County Financial Group 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.