Correlation Between Home Bancorp and WesBanco
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and WesBanco 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 WesBanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and WesBanco, you can compare the effects of market volatilities on Home Bancorp and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and WesBanco.
Diversification Opportunities for Home Bancorp and WesBanco
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and WesBanco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Home Bancorp i.e., Home Bancorp and WesBanco go up and down completely randomly.
Pair Corralation between Home Bancorp and WesBanco
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.15 times more return on investment than WesBanco. However, Home Bancorp is 1.15 times more volatile than WesBanco. It trades about 0.13 of its potential returns per unit of risk. WesBanco is currently generating about 0.13 per unit of risk. If you would invest 3,519 in Home Bancorp on September 2, 2024 and sell it today you would earn a total of 1,554 from holding Home Bancorp or generate 44.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Bancorp vs. WesBanco
Performance |
| Timeline |
| Home Bancorp |
| WesBanco |
Home Bancorp and WesBanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Bancorp and WesBanco
The main advantage of trading using opposite Home Bancorp and WesBanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, WesBanco 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 WesBanco will offset losses from the drop in WesBanco's long position.| Home Bancorp vs. Affinity Bancshares | Home Bancorp vs. Auburn National Bancorporation | Home Bancorp vs. BayCom Corp | Home Bancorp vs. First Community |
| WesBanco vs. Union Bankshares | WesBanco vs. Home Bancorp | WesBanco vs. Rhinebeck Bancorp | WesBanco vs. LINKBANCORP |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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