Correlation Between Northwest Bancshares and First Commonwealth
Can any of the company-specific risk be diversified away by investing in both Northwest Bancshares and First Commonwealth 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 Northwest Bancshares and First Commonwealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Bancshares and First Commonwealth Financial, you can compare the effects of market volatilities on Northwest Bancshares and First Commonwealth 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 Northwest Bancshares with a short position of First Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Bancshares and First Commonwealth.
Diversification Opportunities for Northwest Bancshares and First Commonwealth
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northwest and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Bancshares and First Commonwealth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Commonwealth and Northwest Bancshares 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 Northwest Bancshares are associated (or correlated) with First Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Commonwealth has no effect on the direction of Northwest Bancshares i.e., Northwest Bancshares and First Commonwealth go up and down completely randomly.
Pair Corralation between Northwest Bancshares and First Commonwealth
Given the investment horizon of 90 days Northwest Bancshares is expected to generate 1.03 times more return on investment than First Commonwealth. However, Northwest Bancshares is 1.03 times more volatile than First Commonwealth Financial. It trades about -0.02 of its potential returns per unit of risk. First Commonwealth Financial is currently generating about -0.06 per unit of risk. If you would invest 1,241 in Northwest Bancshares on August 30, 2025 and sell it today you would lose (45.00) from holding Northwest Bancshares or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Bancshares vs. First Commonwealth Financial
Performance |
| Timeline |
| Northwest Bancshares |
| First Commonwealth |
Northwest Bancshares and First Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Bancshares and First Commonwealth
The main advantage of trading using opposite Northwest Bancshares and First Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Bancshares position performs unexpectedly, First Commonwealth 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 Commonwealth will offset losses from the drop in First Commonwealth's long position.| Northwest Bancshares vs. Comtech Telecommunications Corp | Northwest Bancshares vs. ABN AMRO Bank | Northwest Bancshares vs. BV Financial, Common | Northwest Bancshares vs. Space Communication |
| First Commonwealth vs. Westrock Coffee | First Commonwealth vs. Baristas Coffee | First Commonwealth vs. Naked Wines plc | First Commonwealth vs. Coffee Holding Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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