Correlation Between Northrim BanCorp and HealthEquity

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

Diversification Opportunities for Northrim BanCorp and HealthEquity

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Northrim and HealthEquity is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Northrim BanCorp and HealthEquity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthEquity 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 HealthEquity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthEquity has no effect on the direction of Northrim BanCorp i.e., Northrim BanCorp and HealthEquity go up and down completely randomly.

Pair Corralation between Northrim BanCorp and HealthEquity

Given the investment horizon of 90 days Northrim BanCorp is expected to generate 1.49 times more return on investment than HealthEquity. However, Northrim BanCorp is 1.49 times more volatile than HealthEquity. It trades about 0.09 of its potential returns per unit of risk. HealthEquity is currently generating about -0.03 per unit of risk. If you would invest  4,909  in Northrim BanCorp on February 23, 2024 and sell it today you would earn a total of  542.00  from holding Northrim BanCorp or generate 11.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Northrim BanCorp  vs.  HealthEquity

 Performance 
       Timeline  
Northrim BanCorp 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Northrim BanCorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Northrim BanCorp may actually be approaching a critical reversion point that can send shares even higher in June 2024.
HealthEquity 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HealthEquity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, HealthEquity is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Northrim BanCorp and HealthEquity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Northrim BanCorp and HealthEquity

The main advantage of trading using opposite Northrim BanCorp and HealthEquity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrim BanCorp position performs unexpectedly, HealthEquity 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 HealthEquity will offset losses from the drop in HealthEquity's long position.
The idea behind Northrim BanCorp and HealthEquity 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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