Correlation Between Citizens Financial and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both Citizens Financial 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 Citizens Financial and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and Home Bancorp, you can compare the effects of market volatilities on Citizens Financial 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 Citizens Financial with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Home Bancorp.
Diversification Opportunities for Citizens Financial and Home Bancorp
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citizens and Home is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and Citizens Financial 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 Citizens Financial Group 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 Citizens Financial i.e., Citizens Financial and Home Bancorp go up and down completely randomly.
Pair Corralation between Citizens Financial and Home Bancorp
Assuming the 90 days trading horizon Citizens Financial is expected to generate 1.45 times less return on investment than Home Bancorp. But when comparing it to its historical volatility, Citizens Financial Group is 1.23 times less risky than Home Bancorp. It trades about 0.03 of its potential returns per unit of risk. Home Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,062 in Home Bancorp on August 27, 2024 and sell it today you would earn a total of 952.00 from holding Home Bancorp or generate 23.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Home Bancorp
Performance |
| Timeline |
| Citizens Financial |
| Home Bancorp |
Citizens Financial and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Home Bancorp
The main advantage of trading using opposite Citizens Financial and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial 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.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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