Correlation Between Citizens Community and Home Federal
Can any of the company-specific risk be diversified away by investing in both Citizens Community 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 Citizens Community and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Community Bancorp and Home Federal Bancorp, you can compare the effects of market volatilities on Citizens Community 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 Citizens Community with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Community and Home Federal.
Diversification Opportunities for Citizens Community and Home Federal
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citizens and Home is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Community 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 Citizens Community 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 Community Bancorp 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 Citizens Community i.e., Citizens Community and Home Federal go up and down completely randomly.
Pair Corralation between Citizens Community and Home Federal
Given the investment horizon of 90 days Citizens Community Bancorp is expected to generate 0.61 times more return on investment than Home Federal. However, Citizens Community Bancorp is 1.63 times less risky than Home Federal. It trades about 0.44 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 1,418 in Citizens Community Bancorp on August 28, 2024 and sell it today you would earn a total of 222.00 from holding Citizens Community Bancorp or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Citizens Community Bancorp vs. Home Federal Bancorp
Performance |
| Timeline |
| Citizens Community |
| Home Federal Bancorp |
Citizens Community and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Community and Home Federal
The main advantage of trading using opposite Citizens Community and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Community 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.| Citizens Community vs. Home Federal Bancorp | Citizens Community vs. First Financial Northwest | Citizens Community vs. First Northwest Bancorp | Citizens Community vs. First Capital |
| Home Federal vs. Fifth Third Bancorp | Home Federal vs. Huntington Bancshares Incorporated | Home Federal vs. Comerica | 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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