Correlation Between Northeast Indiana and First Bancshares

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

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

Diversification Opportunities for Northeast Indiana and First Bancshares

0.0

Correlation Coefficient

Northeast Indiana  First Bancshares

Pay attention - limited upside

The 3 months correlation between Northeast and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northeast Indiana Bancorp and First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancshares and Northeast Indiana 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 Northeast Indiana Bancorp are associated (or correlated) with First Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancshares has no effect on the direction of Northeast Indiana i.e., Northeast Indiana and First Bancshares go up and down completely randomly.

Pair Corralation between Northeast Indiana and First Bancshares

If you would invest (100.00) in First Bancshares on May 5, 2025 and sell it today you would earn a total of  100.00  from holding First Bancshares or generate -100.0% return on investment over 90 days.

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

Northeast Indiana Bancorp  vs.  First Bancshares

Northeast Indiana Bancorp

Risk-Adjusted Performance

Very Weak

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

First Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, First Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Northeast Indiana and First Bancshares

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

The idea behind Northeast Indiana Bancorp and First Bancshares 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..