Correlation Between LINKBANCORP and First Western

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

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

Diversification Opportunities for LINKBANCORP and First Western

0.8

Correlation Coefficient

LINKBANCORP  First Western

Very poor diversification

The 3 months correlation between LINKBANCORP and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and First Western Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Western Financial and LINKBANCORP 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 LINKBANCORP are associated (or correlated) with First Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Western Financial has no effect on the direction of LINKBANCORP i.e., LINKBANCORP and First Western go up and down completely randomly.

Pair Corralation between LINKBANCORP and First Western

Given the investment horizon of 90 days LINKBANCORP is expected to generate 1.14 times more return on investment than First Western. However, LINKBANCORP is 1.14 times more volatile than First Western Financial. It trades about -0.03 of its potential returns per unit of risk. First Western Financial is currently generating about -0.07 per unit of risk. If you would invest  717.00  in LINKBANCORP on May 11, 2025 and sell it today you would lose (36.00) from holding LINKBANCORP or give up 5.02% of portfolio value over 90 days.

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

LINKBANCORP  vs.  First Western Financial

LINKBANCORP

Risk-Adjusted Performance

Weakest

Over the last 90 days LINKBANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, LINKBANCORP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

First Western Financial

Risk-Adjusted Performance

Weakest

Over the last 90 days First Western 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 stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with LINKBANCORP and First Western

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

The idea behind LINKBANCORP and First Western 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.