Correlation Between Home Bancorp and Eagle Financial
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and Eagle Financial 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 Eagle Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and Eagle Financial Services, you can compare the effects of market volatilities on Home Bancorp and Eagle Financial 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 Eagle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and Eagle Financial.
Diversification Opportunities for Home Bancorp and Eagle Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Eagle is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and Eagle Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Financial Services 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 Eagle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Financial Services has no effect on the direction of Home Bancorp i.e., Home Bancorp and Eagle Financial go up and down completely randomly.
Pair Corralation between Home Bancorp and Eagle Financial
Given the investment horizon of 90 days Home Bancorp is expected to generate 0.86 times more return on investment than Eagle Financial. However, Home Bancorp is 1.16 times less risky than Eagle Financial. It trades about 0.03 of its potential returns per unit of risk. Eagle Financial Services is currently generating about 0.02 per unit of risk. If you would invest 3,771 in Home Bancorp on November 2, 2024 and sell it today you would earn a total of 1,137 from holding Home Bancorp or generate 30.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.58% |
| Values | Daily Returns |
Home Bancorp vs. Eagle Financial Services
Performance |
| Timeline |
| Home Bancorp |
| Eagle Financial Services |
Home Bancorp and Eagle Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and Eagle Financial
The main advantage of trading using opposite Home Bancorp and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, Eagle Financial 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 Eagle Financial will offset losses from the drop in Eagle Financial'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 |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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