Correlation Between Northwest Bancshares and WisdomTree
Can any of the company-specific risk be diversified away by investing in both Northwest Bancshares and WisdomTree 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 WisdomTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Bancshares and WisdomTree, you can compare the effects of market volatilities on Northwest Bancshares and WisdomTree 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 WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Bancshares and WisdomTree.
Diversification Opportunities for Northwest Bancshares and WisdomTree
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Northwest and WisdomTree is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Bancshares and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of Northwest Bancshares i.e., Northwest Bancshares and WisdomTree go up and down completely randomly.
Pair Corralation between Northwest Bancshares and WisdomTree
Given the investment horizon of 90 days Northwest Bancshares is expected to generate 0.97 times more return on investment than WisdomTree. However, Northwest Bancshares is 1.03 times less risky than WisdomTree. It trades about 0.01 of its potential returns per unit of risk. WisdomTree is currently generating about -0.17 per unit of risk. If you would invest 1,176 in Northwest Bancshares on August 18, 2025 and sell it today you would earn a total of 1.00 from holding Northwest Bancshares or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Bancshares vs. WisdomTree
Performance |
| Timeline |
| Northwest Bancshares |
| WisdomTree |
Northwest Bancshares and WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Bancshares and WisdomTree
The main advantage of trading using opposite Northwest Bancshares and WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Bancshares position performs unexpectedly, WisdomTree 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 WisdomTree will offset losses from the drop in WisdomTree's long position.| Northwest Bancshares vs. City Holding | Northwest Bancshares vs. Nicolet Bankshares | Northwest Bancshares vs. First Commonwealth Financial | Northwest Bancshares vs. OFG Bancorp |
| WisdomTree vs. Acadian Asset Management | WisdomTree vs. Tri Continental Closed | WisdomTree vs. Grab Holdings | WisdomTree vs. Oxford Lane Capital |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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