Correlation Between Home Bancorp and Community Trust
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and Community Trust 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 Community Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and Community Trust Bancorp, you can compare the effects of market volatilities on Home Bancorp and Community Trust 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 Community Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and Community Trust.
Diversification Opportunities for Home Bancorp and Community Trust
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Home and Community is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and Community Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Trust Bancorp 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 Community Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Trust Bancorp has no effect on the direction of Home Bancorp i.e., Home Bancorp and Community Trust go up and down completely randomly.
Pair Corralation between Home Bancorp and Community Trust
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.01 times more return on investment than Community Trust. However, Home Bancorp is 1.01 times more volatile than Community Trust Bancorp. It trades about 0.05 of its potential returns per unit of risk. Community Trust Bancorp is currently generating about 0.04 per unit of risk. If you would invest 4,218 in Home Bancorp on October 22, 2024 and sell it today you would earn a total of 433.00 from holding Home Bancorp or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Bancorp vs. Community Trust Bancorp
Performance |
| Timeline |
| Home Bancorp |
| Community Trust Bancorp |
Home Bancorp and Community Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and Community Trust
The main advantage of trading using opposite Home Bancorp and Community Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, Community Trust 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 Community Trust will offset losses from the drop in Community Trust's 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 |
| Community Trust vs. Home Bancorp | Community Trust vs. Heritage Financial | Community Trust vs. First Northwest Bancorp | Community Trust vs. HomeTrust 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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