Correlation Between Home Bancorp and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and Affinity Bancshares 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 Home Bancorp and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and Affinity Bancshares, you can compare the effects of market volatilities on Home Bancorp and Affinity Bancshares 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 Home Bancorp with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and Affinity Bancshares.
Diversification Opportunities for Home Bancorp and Affinity Bancshares
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Affinity is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Home Bancorp 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 Home Bancorp are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Home Bancorp i.e., Home Bancorp and Affinity Bancshares go up and down completely randomly.
Pair Corralation between Home Bancorp and Affinity Bancshares
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.38 times less return on investment than Affinity Bancshares. In addition to that, Home Bancorp is 1.08 times more volatile than Affinity Bancshares. It trades about 0.03 of its total potential returns per unit of risk. Affinity Bancshares is currently generating about 0.05 per unit of volatility. If you would invest 1,459 in Affinity Bancshares on August 24, 2024 and sell it today you would earn a total of 693.00 from holding Affinity Bancshares or generate 47.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Home Bancorp vs. Affinity Bancshares
Performance |
| Timeline |
| Home Bancorp |
| Affinity Bancshares |
Home Bancorp and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and Affinity Bancshares
The main advantage of trading using opposite Home Bancorp and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, Affinity Bancshares 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| Home Bancorp vs. Home Federal Bancorp | Home Bancorp vs. Community West Bancshares | Home Bancorp vs. First Financial Northwest | Home Bancorp vs. First Capital |
| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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