Correlation Between Home Federal and American Riviera

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Home Federal and American Riviera 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 Federal and American Riviera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Federal Bancorp and American Riviera Bank, you can compare the effects of market volatilities on Home Federal and American Riviera 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 Federal with a short position of American Riviera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and American Riviera.

Diversification Opportunities for Home Federal and American Riviera

HomeAmericanDiversified AwayHomeAmericanDiversified Away100%
-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Home and American is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and American Riviera Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Riviera Bank and Home Federal 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 Federal Bancorp are associated (or correlated) with American Riviera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Riviera Bank has no effect on the direction of Home Federal i.e., Home Federal and American Riviera go up and down completely randomly.

Pair Corralation between Home Federal and American Riviera

Given the investment horizon of 90 days Home Federal is expected to generate 1.94 times less return on investment than American Riviera. In addition to that, Home Federal is 2.28 times more volatile than American Riviera Bank. It trades about 0.0 of its total potential returns per unit of risk. American Riviera Bank is currently generating about 0.01 per unit of volatility. If you would invest  1,850  in American Riviera Bank on November 27, 2024 and sell it today you would earn a total of  89.00  from holding American Riviera Bank or generate 4.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy86.21%
ValuesDaily Returns

Home Federal Bancorp  vs.  American Riviera Bank

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15HFBL ARBV
       Timeline  
Home Federal Bancorp 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Home Federal Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Home Federal may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb12.212.412.612.81313.213.413.6
American Riviera Bank 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days American Riviera Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, American Riviera is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb18.81919.219.419.619.820

Home Federal and American Riviera Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.24-6.17-4.1-2.030.02.054.176.298.4110.53 0.51.01.5
JavaScript chart by amCharts 3.21.15HFBL ARBV
       Returns  

Pair Trading with Home Federal and American Riviera

The main advantage of trading using opposite Home Federal and American Riviera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, American Riviera 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 American Riviera will offset losses from the drop in American Riviera's long position.
The idea behind Home Federal Bancorp and American Riviera Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.


 

Trending Assets

NULL
Nedbank Group Limited
0.00  0.00  0.00 
TIG
Tigere Real Estate
114.95  0.09  0.08 
ZBFH
ZB FINANCIAL HOLDINGS
451.00  -18.9  -4.02 
WILD
WILLDALE LIMITED
2.40  0.26  12.15 
RIOZ
RIO ZIM LIMITED
106.90  0.00  0.00 
SACL
STAR AFRICA PORATION
2.86  -0.14  -4.67 
CAFCA
CAFCA LIMITED
1,800  -25  -1.37 
DMCS
Datvest Modified Consumer
3.00  0.00  0.00 
EHZL
ECOCASH HOLDINGS ZIMBABWE
14.09  -1.4  -9.04