Correlation Between Home Federal and Auburn National
Can any of the company-specific risk be diversified away by investing in both Home Federal and Auburn National 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 Auburn National 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 Auburn National Bancorporation, you can compare the effects of market volatilities on Home Federal and Auburn National 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 Auburn National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Auburn National.
Diversification Opportunities for Home Federal and Auburn National
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Auburn is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Auburn National Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn National Banc 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 Auburn National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn National Banc has no effect on the direction of Home Federal i.e., Home Federal and Auburn National go up and down completely randomly.
Pair Corralation between Home Federal and Auburn National
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 27.9 times more return on investment than Auburn National. However, Home Federal is 27.9 times more volatile than Auburn National Bancorporation. It trades about 0.05 of its potential returns per unit of risk. Auburn National Bancorporation is currently generating about 0.03 per unit of risk. If you would invest 1,414 in Home Federal Bancorp on August 28, 2024 and sell it today you would lose (178.00) from holding Home Federal Bancorp or give up 12.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.44% |
| Values | Daily Returns |
Home Federal Bancorp vs. Auburn National Bancorp.
Performance |
| Timeline |
| Home Federal Bancorp |
| Auburn National Banc |
Home Federal and Auburn National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Auburn National
The main advantage of trading using opposite Home Federal and Auburn National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Auburn National 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 Auburn National will offset losses from the drop in Auburn National's long position.| Home Federal vs. Fifth Third Bancorp | Home Federal vs. Huntington Bancshares Incorporated | Home Federal vs. MT Bank |
| Auburn National vs. Home Federal Bancorp | Auburn National vs. LINKBANCORP | Auburn National vs. Affinity Bancshares | Auburn National vs. Southern California 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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