Correlation Between Auburn National and Home Federal
Can any of the company-specific risk be diversified away by investing in both Auburn National 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 Auburn National and Home Federal 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 Federal Bancorp, you can compare the effects of market volatilities on Auburn National 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 Auburn National with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn National and Home Federal.
Diversification Opportunities for Auburn National and Home Federal
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Auburn and Home is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. 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 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 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 Auburn National i.e., Auburn National and Home Federal go up and down completely randomly.
Pair Corralation between Auburn National and Home Federal
Given the investment horizon of 90 days Auburn National Bancorporation is expected to generate 0.68 times more return on investment than Home Federal. However, Auburn National Bancorporation is 1.47 times less risky than Home Federal. It trades about 0.25 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about -0.03 per unit of risk. If you would invest 2,161 in Auburn National Bancorporation on August 29, 2024 and sell it today you would earn a total of 205.00 from holding Auburn National Bancorporation or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Auburn National Bancorp. vs. Home Federal Bancorp
Performance |
| Timeline |
| Auburn National Banc |
| Home Federal Bancorp |
Auburn National and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auburn National and Home Federal
The main advantage of trading using opposite Auburn National and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National 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.| Auburn National vs. Home Federal Bancorp | Auburn National vs. LINKBANCORP | Auburn National vs. Affinity Bancshares | Auburn National vs. Southern California Bancorp |
| Home Federal vs. Fifth Third Bancorp | Home Federal vs. Huntington Bancshares Incorporated | Home Federal vs. MT Bank |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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