Correlation Between Westpac Banking and First Northwest
Can any of the company-specific risk be diversified away by investing in both Westpac Banking and First Northwest 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 Westpac Banking and First Northwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westpac Banking and First Northwest Bancorp, you can compare the effects of market volatilities on Westpac Banking and First Northwest 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 Westpac Banking with a short position of First Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westpac Banking and First Northwest.
Diversification Opportunities for Westpac Banking and First Northwest
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westpac and First is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Westpac Banking and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest Bancorp and Westpac Banking 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 Westpac Banking are associated (or correlated) with First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of Westpac Banking i.e., Westpac Banking and First Northwest go up and down completely randomly.
Pair Corralation between Westpac Banking and First Northwest
Assuming the 90 days trading horizon Westpac Banking is expected to generate 66.98 times less return on investment than First Northwest. But when comparing it to its historical volatility, Westpac Banking is 8.95 times less risky than First Northwest. It trades about 0.04 of its potential returns per unit of risk. First Northwest Bancorp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 696.00 in First Northwest Bancorp on September 10, 2025 and sell it today you would earn a total of 287.00 from holding First Northwest Bancorp or generate 41.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Westpac Banking vs. First Northwest Bancorp
Performance |
| Timeline |
| Westpac Banking |
| First Northwest Bancorp |
Westpac Banking and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westpac Banking and First Northwest
The main advantage of trading using opposite Westpac Banking and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westpac Banking position performs unexpectedly, First Northwest 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 Northwest will offset losses from the drop in First Northwest's long position.| Westpac Banking vs. Macquarie Bank | Westpac Banking vs. Credit Clear | Westpac Banking vs. Truscott Mining | Westpac Banking vs. MA Financial Group |
| First Northwest vs. Bank of the | First Northwest vs. IF Bancorp | First Northwest vs. First Bancshares | First Northwest vs. First Guaranty Bancshares |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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