Correlation Between Affinity Bancshares and Home Federal
Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and Home Federal 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 Affinity Bancshares and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affinity Bancshares and Home Federal Bancorp, you can compare the effects of market volatilities on Affinity Bancshares and Home Federal 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 Affinity Bancshares with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and Home Federal.
Diversification Opportunities for Affinity Bancshares and Home Federal
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Affinity and Home is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal Bancorp and Affinity 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 Affinity Bancshares are associated (or correlated) with Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Home Federal go up and down completely randomly.
Pair Corralation between Affinity Bancshares and Home Federal
Given the investment horizon of 90 days Affinity Bancshares is expected to generate 42.07 times less return on investment than Home Federal. But when comparing it to its historical volatility, Affinity Bancshares is 47.13 times less risky than Home Federal. It trades about 0.1 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,102 in Home Federal Bancorp on August 24, 2024 and sell it today you would earn a total of 127.00 from holding Home Federal Bancorp or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.4% |
| Values | Daily Returns |
Affinity Bancshares vs. Home Federal Bancorp
Performance |
| Timeline |
| Affinity Bancshares |
| Home Federal Bancorp |
Affinity Bancshares and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affinity Bancshares and Home Federal
The main advantage of trading using opposite Affinity Bancshares and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, Home Federal 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 Home Federal will offset losses from the drop in Home Federal's long position.| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |