Correlation Between First Northwest and PCB Bancorp

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Can any of the company-specific risk be diversified away by investing in both First Northwest and PCB Bancorp 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 Northwest and PCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Northwest Bancorp and PCB Bancorp, you can compare the effects of market volatilities on First Northwest and PCB Bancorp 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 Northwest with a short position of PCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Northwest and PCB Bancorp.

Diversification Opportunities for First Northwest and PCB Bancorp

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between First and PCB is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding First Northwest Bancorp and PCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCB Bancorp and First Northwest 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 Northwest Bancorp are associated (or correlated) with PCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCB Bancorp has no effect on the direction of First Northwest i.e., First Northwest and PCB Bancorp go up and down completely randomly.

Pair Corralation between First Northwest and PCB Bancorp

Given the investment horizon of 90 days First Northwest Bancorp is expected to under-perform the PCB Bancorp. In addition to that, First Northwest is 1.58 times more volatile than PCB Bancorp. It trades about -0.15 of its total potential returns per unit of risk. PCB Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  1,942  in PCB Bancorp on April 30, 2025 and sell it today you would earn a total of  199.00  from holding PCB Bancorp or generate 10.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

First Northwest Bancorp  vs.  PCB Bancorp

 Performance 
       Timeline  
First Northwest Bancorp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days First Northwest Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
PCB Bancorp 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in PCB Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, PCB Bancorp may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Northwest and PCB Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Northwest and PCB Bancorp

The main advantage of trading using opposite First Northwest and PCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Northwest position performs unexpectedly, PCB Bancorp 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 PCB Bancorp will offset losses from the drop in PCB Bancorp's long position.
The idea behind First Northwest Bancorp and PCB 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.
Check out your portfolio center.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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