Correlation Between Home Federal and Brookline Bancorp
Can any of the company-specific risk be diversified away by investing in both Home Federal and Brookline 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 Federal and Brookline Bancorp 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 Brookline Bancorp, you can compare the effects of market volatilities on Home Federal and Brookline 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 Federal with a short position of Brookline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Brookline Bancorp.
Diversification Opportunities for Home Federal and Brookline Bancorp
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Brookline is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Brookline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookline Bancorp 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 Brookline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookline Bancorp has no effect on the direction of Home Federal i.e., Home Federal and Brookline Bancorp go up and down completely randomly.
Pair Corralation between Home Federal and Brookline Bancorp
Given the investment horizon of 90 days Home Federal Bancorp is expected to under-perform the Brookline Bancorp. In addition to that, Home Federal is 1.96 times more volatile than Brookline Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Brookline Bancorp is currently generating about 0.02 per unit of volatility. If you would invest 1,195 in Brookline Bancorp on October 22, 2024 and sell it today you would earn a total of 5.00 from holding Brookline Bancorp or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.21% |
| Values | Daily Returns |
Home Federal Bancorp vs. Brookline Bancorp
Performance |
| Timeline |
| Home Federal Bancorp |
| Brookline Bancorp |
Home Federal and Brookline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Brookline Bancorp
The main advantage of trading using opposite Home Federal and Brookline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Brookline 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 Brookline Bancorp will offset losses from the drop in Brookline Bancorp's long position.The idea behind Home Federal Bancorp and Brookline Bancorp 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.| Brookline Bancorp vs. Heritage Commerce Corp | Brookline Bancorp vs. Eastern Bankshares | Brookline Bancorp vs. HarborOne Bancorp | Brookline Bancorp vs. Kearny Financial Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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