Correlation Between Northrim Bancorp and Balancer

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Can any of the company-specific risk be diversified away by investing in both Northrim Bancorp and Balancer 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 Northrim Bancorp and Balancer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northrim Bancorp and Balancer, you can compare the effects of market volatilities on Northrim Bancorp and Balancer 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 Northrim Bancorp with a short position of Balancer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrim Bancorp and Balancer.

Diversification Opportunities for Northrim Bancorp and Balancer

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Northrim and Balancer is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Northrim Bancorp and Balancer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balancer and Northrim Bancorp 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 Northrim Bancorp are associated (or correlated) with Balancer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balancer has no effect on the direction of Northrim Bancorp i.e., Northrim Bancorp and Balancer go up and down completely randomly.

Pair Corralation between Northrim Bancorp and Balancer

Given the investment horizon of 90 days Northrim Bancorp is expected to generate 0.27 times more return on investment than Balancer. However, Northrim Bancorp is 3.77 times less risky than Balancer. It trades about 0.08 of its potential returns per unit of risk. Balancer is currently generating about -0.03 per unit of risk. If you would invest  3,042  in Northrim Bancorp on August 28, 2022 and sell it today you would earn a total of  2,575  from holding Northrim Bancorp or generate 84.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy57.83%
ValuesDaily Returns

Northrim Bancorp  vs.  Balancer

 Performance (%) 
       Timeline  
Northrim Bancorp 
Northrim Performance
32 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Northrim Bancorp are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Northrim Bancorp revealed solid returns over the last few months and may actually be approaching a breakup point.

Northrim Price Channel

Balancer 
Balancer Performance
0 of 100
Over the last 90 days Balancer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Balancer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Balancer Price Channel

Northrim Bancorp and Balancer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Northrim Bancorp and Balancer

The main advantage of trading using opposite Northrim Bancorp and Balancer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrim Bancorp position performs unexpectedly, Balancer 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 Balancer will offset losses from the drop in Balancer's long position.
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The idea behind Northrim Bancorp and Balancer 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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