Correlation Between First Commonwealth and Home Federal
Can any of the company-specific risk be diversified away by investing in both First Commonwealth 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 First Commonwealth and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Commonwealth Financial and Home Federal Bancorp, you can compare the effects of market volatilities on First Commonwealth 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 First Commonwealth with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Commonwealth and Home Federal.
Diversification Opportunities for First Commonwealth and Home Federal
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Home is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding First Commonwealth Financial 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 First Commonwealth 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 First Commonwealth Financial 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 First Commonwealth i.e., First Commonwealth and Home Federal go up and down completely randomly.
Pair Corralation between First Commonwealth and Home Federal
Considering the 90-day investment horizon First Commonwealth is expected to generate 24.07 times less return on investment than Home Federal. But when comparing it to its historical volatility, First Commonwealth Financial is 40.04 times less risky than Home Federal. It trades about 0.14 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,113 in Home Federal Bancorp on August 28, 2024 and sell it today you would earn a total of 123.00 from holding Home Federal Bancorp or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
First Commonwealth Financial vs. Home Federal Bancorp
Performance |
| Timeline |
| First Commonwealth |
| Home Federal Bancorp |
First Commonwealth and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Commonwealth and Home Federal
The main advantage of trading using opposite First Commonwealth and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Commonwealth 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.| First Commonwealth vs. Fifth Third Bancorp | First Commonwealth vs. Huntington Bancshares Incorporated | First Commonwealth vs. MT Bank |
| Home Federal vs. Fifth Third Bancorp | Home Federal vs. Huntington Bancshares Incorporated | 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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