Correlation Between Home Bancorp and Oconee Financial
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and Oconee 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 Oconee 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 Oconee Financial, you can compare the effects of market volatilities on Home Bancorp and Oconee 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 Oconee Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and Oconee Financial.
Diversification Opportunities for Home Bancorp and Oconee Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Oconee is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and Oconee Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oconee Financial 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 Oconee Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oconee Financial has no effect on the direction of Home Bancorp i.e., Home Bancorp and Oconee Financial go up and down completely randomly.
Pair Corralation between Home Bancorp and Oconee Financial
Given the investment horizon of 90 days Home Bancorp is expected to generate 2.64 times more return on investment than Oconee Financial. However, Home Bancorp is 2.64 times more volatile than Oconee Financial. It trades about 0.06 of its potential returns per unit of risk. Oconee Financial is currently generating about 0.12 per unit of risk. If you would invest 3,818 in Home Bancorp on September 3, 2024 and sell it today you would earn a total of 1,291 from holding Home Bancorp or generate 33.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Home Bancorp vs. Oconee Financial
Performance |
| Timeline |
| Home Bancorp |
| Oconee Financial |
Home Bancorp and Oconee Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and Oconee Financial
The main advantage of trading using opposite Home Bancorp and Oconee Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, Oconee 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 Oconee Financial will offset losses from the drop in Oconee Financial's long position.| Home Bancorp vs. JPMorgan Chase Co | Home Bancorp vs. Citigroup | Home Bancorp vs. Wells Fargo | Home Bancorp vs. Toronto Dominion Bank |
| Oconee Financial vs. First Hawaiian | Oconee Financial vs. Central Pacific Financial | Oconee Financial vs. Territorial Bancorp | Oconee Financial vs. Comerica |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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