Correlation Between Bridgewater Bancshares and Home Federal
Can any of the company-specific risk be diversified away by investing in both Bridgewater 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 Bridgewater 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 Bridgewater Bancshares Depositary and Home Federal Bancorp, you can compare the effects of market volatilities on Bridgewater 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 Bridgewater Bancshares with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgewater Bancshares and Home Federal.
Diversification Opportunities for Bridgewater Bancshares and Home Federal
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bridgewater and Home is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bridgewater Bancshares Deposit 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 Bridgewater 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 Bridgewater Bancshares Depositary 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 Bridgewater Bancshares i.e., Bridgewater Bancshares and Home Federal go up and down completely randomly.
Pair Corralation between Bridgewater Bancshares and Home Federal
Assuming the 90 days horizon Bridgewater Bancshares Depositary is expected to under-perform the Home Federal. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bridgewater Bancshares Depositary is 1.16 times less risky than Home Federal. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Home Federal Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,216 in Home Federal Bancorp on September 2, 2024 and sell it today you would earn a total of 20.00 from holding Home Federal Bancorp or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgewater Bancshares Deposit vs. Home Federal Bancorp
Performance |
| Timeline |
| Bridgewater Bancshares |
| Home Federal Bancorp |
Bridgewater Bancshares and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgewater Bancshares and Home Federal
The main advantage of trading using opposite Bridgewater Bancshares and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgewater 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.| Bridgewater Bancshares vs. CNB Financial | Bridgewater Bancshares vs. First Guaranty Bancshares | Bridgewater Bancshares vs. Dime Community Bancshares | Bridgewater Bancshares vs. Brighthouse Financial |
| Home Federal vs. Affinity Bancshares | Home Federal vs. Auburn National Bancorporation | Home Federal vs. BayCom Corp | Home Federal vs. First Community |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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