Correlation Between First Farmers and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both First Farmers 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 First Farmers and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Farmers Financial and Home Bancorp, you can compare the effects of market volatilities on First Farmers 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 First Farmers with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Farmers and Home Bancorp.
Diversification Opportunities for First Farmers and Home Bancorp
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Home is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Farmers Financial and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and First Farmers 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 Farmers Financial 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 First Farmers i.e., First Farmers and Home Bancorp go up and down completely randomly.
Pair Corralation between First Farmers and Home Bancorp
Given the investment horizon of 90 days First Farmers Financial is expected to generate 0.33 times more return on investment than Home Bancorp. However, First Farmers Financial is 3.06 times less risky than Home Bancorp. It trades about 0.1 of its potential returns per unit of risk. Home Bancorp is currently generating about -0.03 per unit of risk. If you would invest 6,600 in First Farmers Financial on November 28, 2024 and sell it today you would earn a total of 75.00 from holding First Farmers Financial or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Farmers Financial vs. Home Bancorp
Performance |
| Timeline |
| First Farmers Financial |
| Home Bancorp |
First Farmers and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Farmers and Home Bancorp
The main advantage of trading using opposite First Farmers and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Farmers 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.| First Farmers vs. Farmers Bancorp | First Farmers vs. Farmers Merchants Bancorp | First Farmers vs. Lakeland Financial | First Farmers vs. FFW Corporation |
| 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 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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