Correlation Between FFW and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both FFW 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 FFW and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FFW Corporation and Home Bancorp, you can compare the effects of market volatilities on FFW 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 FFW with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FFW and Home Bancorp.
Diversification Opportunities for FFW and Home Bancorp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FFW and Home is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FFW Corp. and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and FFW 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 FFW Corporation 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 FFW i.e., FFW and Home Bancorp go up and down completely randomly.
Pair Corralation between FFW and Home Bancorp
Given the investment horizon of 90 days FFW Corporation is expected to under-perform the Home Bancorp. But the pink sheet apears to be less risky and, when comparing its historical volatility, FFW Corporation is 1.07 times less risky than Home Bancorp. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Home Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,310 in Home Bancorp on September 2, 2024 and sell it today you would earn a total of 1,763 from holding Home Bancorp or generate 53.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 65.32% |
| Values | Daily Returns |
FFW Corp. vs. Home Bancorp
Performance |
| Timeline |
| FFW Corporation |
| Home Bancorp |
FFW and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FFW and Home Bancorp
The main advantage of trading using opposite FFW and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FFW 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.| FFW vs. First Farmers Financial | FFW vs. Farmers Merchants Bancorp | FFW vs. Lakeland Financial | FFW vs. Eagle Financial Services |
| Home Bancorp vs. Affinity Bancshares | Home Bancorp vs. Auburn National Bancorporation | Home Bancorp vs. BayCom Corp | Home Bancorp vs. Community West Bancshares |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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