Correlation Between Home Federal and Colony Bankcorp
Can any of the company-specific risk be diversified away by investing in both Home Federal and Colony Bankcorp 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 Colony Bankcorp 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 Colony Bankcorp, you can compare the effects of market volatilities on Home Federal and Colony Bankcorp 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 Colony Bankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Colony Bankcorp.
Diversification Opportunities for Home Federal and Colony Bankcorp
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Colony is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Colony Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colony Bankcorp 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 Colony Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colony Bankcorp has no effect on the direction of Home Federal i.e., Home Federal and Colony Bankcorp go up and down completely randomly.
Pair Corralation between Home Federal and Colony Bankcorp
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 27.08 times more return on investment than Colony Bankcorp. However, Home Federal is 27.08 times more volatile than Colony Bankcorp. It trades about 0.04 of its potential returns per unit of risk. Colony Bankcorp is currently generating about 0.05 per unit of risk. If you would invest 1,633 in Home Federal Bancorp on August 24, 2024 and sell it today you would lose (404.00) from holding Home Federal Bancorp or give up 24.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.12% |
| Values | Daily Returns |
Home Federal Bancorp vs. Colony Bankcorp
Performance |
| Timeline |
| Home Federal Bancorp |
| Colony Bankcorp |
Home Federal and Colony Bankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Colony Bankcorp
The main advantage of trading using opposite Home Federal and Colony Bankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Colony Bankcorp 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 Colony Bankcorp will offset losses from the drop in Colony Bankcorp's long position.The idea behind Home Federal Bancorp and Colony Bankcorp 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.| Colony Bankcorp vs. Home Federal Bancorp | Colony Bankcorp vs. First Financial Northwest | Colony Bankcorp vs. First Northwest Bancorp | Colony Bankcorp vs. First Capital |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |