Correlation Between Home Bancorp and OFG Bancorp
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and OFG Bancorp 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 OFG Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and OFG Bancorp, you can compare the effects of market volatilities on Home Bancorp and OFG Bancorp 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 OFG Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and OFG Bancorp.
Diversification Opportunities for Home Bancorp and OFG Bancorp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and OFG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and OFG Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFG 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 OFG Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFG Bancorp has no effect on the direction of Home Bancorp i.e., Home Bancorp and OFG Bancorp go up and down completely randomly.
Pair Corralation between Home Bancorp and OFG Bancorp
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.19 times more return on investment than OFG Bancorp. However, Home Bancorp is 1.19 times more volatile than OFG Bancorp. It trades about 0.2 of its potential returns per unit of risk. OFG Bancorp is currently generating about -0.18 per unit of risk. If you would invest 4,627 in Home Bancorp on November 18, 2024 and sell it today you would earn a total of 321.00 from holding Home Bancorp or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Bancorp vs. OFG Bancorp
Performance |
| Timeline |
| Home Bancorp |
| OFG Bancorp |
Home Bancorp and OFG Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and OFG Bancorp
The main advantage of trading using opposite Home Bancorp and OFG Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, OFG Bancorp 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 OFG Bancorp will offset losses from the drop in OFG Bancorp'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 |
| OFG Bancorp vs. Popular | OFG Bancorp vs. The First Bancshares, | OFG Bancorp vs. First Commonwealth Financial | OFG Bancorp vs. First Bancorp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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