Correlation Between Home Bancorp and CRA International
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and CRA International 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 CRA International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and CRA International, you can compare the effects of market volatilities on Home Bancorp and CRA International 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 CRA International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and CRA International.
Diversification Opportunities for Home Bancorp and CRA International
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and CRA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and CRA International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRA International 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 CRA International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRA International has no effect on the direction of Home Bancorp i.e., Home Bancorp and CRA International go up and down completely randomly.
Pair Corralation between Home Bancorp and CRA International
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.89 times less return on investment than CRA International. In addition to that, Home Bancorp is 1.07 times more volatile than CRA International. It trades about 0.03 of its total potential returns per unit of risk. CRA International is currently generating about 0.07 per unit of volatility. If you would invest 11,098 in CRA International on September 2, 2024 and sell it today you would earn a total of 8,405 from holding CRA International or generate 75.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Bancorp vs. CRA International
Performance |
| Timeline |
| Home Bancorp |
| CRA International |
Home Bancorp and CRA International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and CRA International
The main advantage of trading using opposite Home Bancorp and CRA International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, CRA International 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 CRA International will offset losses from the drop in CRA International's long position.| Home Bancorp vs. Affinity Bancshares | Home Bancorp vs. Auburn National Bancorporation | Home Bancorp vs. First Community | Home Bancorp vs. LINKBANCORP |
| CRA International vs. Franklin Covey | CRA International vs. ICF International | CRA International vs. Huron Consulting Group | CRA International vs. FTI Consulting |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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