Correlation Between Home Bancorp and Mid Penn
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and Mid Penn 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 Mid Penn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and Mid Penn Bancorp, you can compare the effects of market volatilities on Home Bancorp and Mid Penn 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 Mid Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and Mid Penn.
Diversification Opportunities for Home Bancorp and Mid Penn
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Home and Mid is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and Mid Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Penn 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 Mid Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Penn Bancorp has no effect on the direction of Home Bancorp i.e., Home Bancorp and Mid Penn go up and down completely randomly.
Pair Corralation between Home Bancorp and Mid Penn
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.24 times more return on investment than Mid Penn. However, Home Bancorp is 1.24 times more volatile than Mid Penn Bancorp. It trades about 0.09 of its potential returns per unit of risk. Mid Penn Bancorp is currently generating about 0.07 per unit of risk. If you would invest 4,375 in Home Bancorp on August 23, 2024 and sell it today you would earn a total of 516.00 from holding Home Bancorp or generate 11.79% 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. Mid Penn Bancorp
Performance |
| Timeline |
| Home Bancorp |
| Mid Penn Bancorp |
Home Bancorp and Mid Penn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and Mid Penn
The main advantage of trading using opposite Home Bancorp and Mid Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, Mid Penn 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 Mid Penn will offset losses from the drop in Mid Penn'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 |
| Mid Penn vs. Affinity Bancshares | Mid Penn vs. Home Federal Bancorp | Mid Penn vs. Franklin Financial Services | Mid Penn vs. ACNB Corporation |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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