Correlation Between Auburn National and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both Auburn National and Home Bancorp 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 Auburn National and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auburn National Bancorporation and Home Bancorp, you can compare the effects of market volatilities on Auburn National and Home Bancorp 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 Auburn National with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn National and Home Bancorp.
Diversification Opportunities for Auburn National and Home Bancorp
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Auburn and Home is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and Auburn National 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 Auburn National Bancorporation are associated (or correlated) with Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of Auburn National i.e., Auburn National and Home Bancorp go up and down completely randomly.
Pair Corralation between Auburn National and Home Bancorp
Given the investment horizon of 90 days Auburn National is expected to generate 1.39 times less return on investment than Home Bancorp. In addition to that, Auburn National is 1.01 times more volatile than Home Bancorp. It trades about 0.02 of its total potential returns per unit of risk. Home Bancorp is currently generating about 0.03 per unit of volatility. If you would invest 3,960 in Home Bancorp on August 24, 2024 and sell it today you would earn a total of 1,054 from holding Home Bancorp or generate 26.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Auburn National Bancorp. vs. Home Bancorp
Performance |
| Timeline |
| Auburn National Banc |
| Home Bancorp |
Auburn National and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auburn National and Home Bancorp
The main advantage of trading using opposite Auburn National and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National position performs unexpectedly, Home Bancorp 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 Bancorp will offset losses from the drop in Home Bancorp's long position.| Auburn National vs. Home Federal Bancorp | Auburn National vs. LINKBANCORP | Auburn National vs. Affinity Bancshares | Auburn National vs. Southern California Bancorp |
| Home Bancorp vs. Home Federal Bancorp | Home Bancorp vs. Community West Bancshares | Home Bancorp vs. First Financial Northwest | Home Bancorp vs. First 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 Stocks Directory module to find actively traded stocks across global markets.
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