Correlation Between Home Bancorp and FFW
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and FFW 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 FFW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and FFW Corporation, you can compare the effects of market volatilities on Home Bancorp and FFW 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 FFW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and FFW.
Diversification Opportunities for Home Bancorp and FFW
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and FFW is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and FFW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFW Corporation 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 FFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFW Corporation has no effect on the direction of Home Bancorp i.e., Home Bancorp and FFW go up and down completely randomly.
Pair Corralation between Home Bancorp and FFW
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.07 times more return on investment than FFW. However, Home Bancorp is 1.07 times more volatile than FFW Corporation. It trades about 0.06 of its potential returns per unit of risk. FFW Corporation is currently generating about 0.0 per unit of risk. 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 |
Home Bancorp vs. FFW Corp.
Performance |
| Timeline |
| Home Bancorp |
| FFW Corporation |
Home Bancorp and FFW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and FFW
The main advantage of trading using opposite Home Bancorp and FFW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, FFW 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 FFW will offset losses from the drop in FFW's long position.| Home Bancorp vs. Affinity Bancshares | Home Bancorp vs. Auburn National Bancorporation | Home Bancorp vs. BayCom Corp | Home Bancorp vs. Community West Bancshares |
| FFW vs. First Farmers Financial | FFW vs. Farmers Merchants Bancorp | FFW vs. Lakeland Financial | FFW vs. Eagle Financial Services |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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