Correlation Between Cambridge Bancorp and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both Cambridge Bancorp 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 Cambridge Bancorp and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cambridge Bancorp and Home Bancorp, you can compare the effects of market volatilities on Cambridge Bancorp 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 Cambridge Bancorp with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambridge Bancorp and Home Bancorp.
Diversification Opportunities for Cambridge Bancorp and Home Bancorp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cambridge and Home is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Bancorp and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and Cambridge Bancorp 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 Cambridge Bancorp 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 Cambridge Bancorp i.e., Cambridge Bancorp and Home Bancorp go up and down completely randomly.
Pair Corralation between Cambridge Bancorp and Home Bancorp
If you would invest 4,305 in Home Bancorp on August 28, 2024 and sell it today you would earn a total of 807.00 from holding Home Bancorp or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 2.33% |
| Values | Daily Returns |
Cambridge Bancorp vs. Home Bancorp
Performance |
| Timeline |
| Cambridge Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Home Bancorp |
Cambridge Bancorp and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambridge Bancorp and Home Bancorp
The main advantage of trading using opposite Cambridge Bancorp and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambridge Bancorp 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.| Cambridge Bancorp vs. First Community | Cambridge Bancorp vs. Community West Bancshares | Cambridge Bancorp vs. First Financial Northwest | Cambridge Bancorp vs. First Northwest Bancorp |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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