Correlation Between Home Bancorp and ST Bancorp
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and ST 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 ST 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 ST Bancorp, you can compare the effects of market volatilities on Home Bancorp and ST 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 ST Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and ST Bancorp.
Diversification Opportunities for Home Bancorp and ST Bancorp
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Home and STBA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and ST Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ST 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 ST Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ST Bancorp has no effect on the direction of Home Bancorp i.e., Home Bancorp and ST Bancorp go up and down completely randomly.
Pair Corralation between Home Bancorp and ST Bancorp
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.3 times less return on investment than ST Bancorp. In addition to that, Home Bancorp is 1.08 times more volatile than ST Bancorp. It trades about 0.07 of its total potential returns per unit of risk. ST Bancorp is currently generating about 0.1 per unit of volatility. If you would invest 2,697 in ST Bancorp on August 26, 2024 and sell it today you would earn a total of 1,647 from holding ST Bancorp or generate 61.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Bancorp vs. ST Bancorp
Performance |
| Timeline |
| Home Bancorp |
| ST Bancorp |
Home Bancorp and ST Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and ST Bancorp
The main advantage of trading using opposite Home Bancorp and ST Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, ST 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 ST Bancorp will offset losses from the drop in ST Bancorp's long position.| Home Bancorp vs. Fifth Third Bancorp | Home Bancorp vs. Zions Bancorporation | Home Bancorp vs. Huntington Bancshares Incorporated | Home Bancorp vs. PNC Financial Services |
| ST Bancorp vs. CrossFirst Bankshares | ST Bancorp vs. Enterprise Financial Services | ST Bancorp vs. The First Bancshares, | ST 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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