Correlation Between First Reliance and First Northern

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

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

Diversification Opportunities for First Reliance and First Northern

0.58

Correlation Coefficient

First Reliance  First Northern

Very weak diversification

The 3 months correlation between First and First is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Reliance Bancshares and First Northern Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northern Community and First Reliance 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 Reliance Bancshares are associated (or correlated) with First Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northern Community has no effect on the direction of First Reliance i.e., First Reliance and First Northern go up and down completely randomly.

Pair Corralation between First Reliance and First Northern

Given the investment horizon of 90 days First Reliance is expected to generate 9.12 times less return on investment than First Northern. In addition to that, First Reliance is 1.25 times more volatile than First Northern Community. It trades about 0.02 of its total potential returns per unit of risk. First Northern Community is currently generating about 0.23 per unit of volatility. If you would invest  984.00  in First Northern Community on May 12, 2025 and sell it today you would earn a total of  133.00  from holding First Northern Community or generate 13.52% return on investment over 90 days.

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

First Reliance Bancshares  vs.  First Northern Community

First Reliance Bancshares

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Reliance Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, First Reliance is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

First Northern Community

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Northern Community are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, First Northern displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Reliance and First Northern

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

The idea behind First Reliance Bancshares and First Northern Community 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.