Correlation Between Home Bancorp and QCR Holdings
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and QCR Holdings 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 QCR Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and QCR Holdings, you can compare the effects of market volatilities on Home Bancorp and QCR Holdings 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 QCR Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and QCR Holdings.
Diversification Opportunities for Home Bancorp and QCR Holdings
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Home and QCR is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and QCR Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QCR Holdings 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 QCR Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QCR Holdings has no effect on the direction of Home Bancorp i.e., Home Bancorp and QCR Holdings go up and down completely randomly.
Pair Corralation between Home Bancorp and QCR Holdings
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.68 times more return on investment than QCR Holdings. However, Home Bancorp is 1.68 times more volatile than QCR Holdings. It trades about -0.03 of its potential returns per unit of risk. QCR Holdings is currently generating about -0.2 per unit of risk. If you would invest 4,812 in Home Bancorp on November 28, 2024 and sell it today you would lose (62.00) from holding Home Bancorp or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Bancorp vs. QCR Holdings
Performance |
| Timeline |
| Home Bancorp |
| QCR Holdings |
Home Bancorp and QCR Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and QCR Holdings
The main advantage of trading using opposite Home Bancorp and QCR Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, QCR Holdings 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 QCR Holdings will offset losses from the drop in QCR Holdings' 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 |
| QCR Holdings vs. Community West Bancshares | QCR Holdings vs. First Financial Northwest | QCR Holdings vs. CF Bankshares | QCR Holdings vs. Home Federal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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