Correlation Between Bank7 Corp and Home Federal
Can any of the company-specific risk be diversified away by investing in both Bank7 Corp 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 Bank7 Corp and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank7 Corp and Home Federal Bancorp, you can compare the effects of market volatilities on Bank7 Corp 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 Bank7 Corp with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank7 Corp and Home Federal.
Diversification Opportunities for Bank7 Corp and Home Federal
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank7 and Home is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank7 Corp 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 Bank7 Corp 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 Bank7 Corp 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 Bank7 Corp i.e., Bank7 Corp and Home Federal go up and down completely randomly.
Pair Corralation between Bank7 Corp and Home Federal
Given the investment horizon of 90 days Bank7 Corp is expected to generate 18.1 times less return on investment than Home Federal. But when comparing it to its historical volatility, Bank7 Corp is 21.05 times less risky than Home Federal. It trades about 0.05 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,850 in Home Federal Bancorp on November 5, 2024 and sell it today you would lose (580.00) from holding Home Federal Bancorp or give up 31.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.68% |
| Values | Daily Returns |
Bank7 Corp vs. Home Federal Bancorp
Performance |
| Timeline |
| Bank7 Corp |
| Home Federal Bancorp |
Bank7 Corp and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank7 Corp and Home Federal
The main advantage of trading using opposite Bank7 Corp and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank7 Corp 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.| Bank7 Corp vs. Home Federal Bancorp | Bank7 Corp vs. First Financial Northwest | Bank7 Corp vs. First Northwest Bancorp | Bank7 Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |