Correlation Between Home Federal and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Home Federal and Citizens Financial 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 Citizens Financial 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 Citizens Financial Services, you can compare the effects of market volatilities on Home Federal and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Citizens Financial.
Diversification Opportunities for Home Federal and Citizens Financial
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Citizens is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Citizens Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial has no effect on the direction of Home Federal i.e., Home Federal and Citizens Financial go up and down completely randomly.
Pair Corralation between Home Federal and Citizens Financial
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 16.12 times more return on investment than Citizens Financial. However, Home Federal is 16.12 times more volatile than Citizens Financial Services. It trades about 0.04 of its potential returns per unit of risk. Citizens Financial Services is currently generating about 0.02 per unit of risk. If you would invest 1,752 in Home Federal Bancorp on September 3, 2024 and sell it today you would lose (516.00) from holding Home Federal Bancorp or give up 29.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.3% |
| Values | Daily Returns |
Home Federal Bancorp vs. Citizens Financial Services
Performance |
| Timeline |
| Home Federal Bancorp |
| Citizens Financial |
Home Federal and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Citizens Financial
The main advantage of trading using opposite Home Federal and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Home Federal vs. JPMorgan Chase Co | Home Federal vs. Citigroup | Home Federal vs. Wells Fargo | Home Federal vs. Toronto Dominion Bank |
| Citizens Financial vs. Home Federal Bancorp | Citizens Financial vs. Community West Bancshares | Citizens Financial vs. Magyar Bancorp | Citizens Financial vs. Finward 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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