Correlation Between Home Federal and 1st Capital
Can any of the company-specific risk be diversified away by investing in both Home Federal and 1st Capital 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 1st Capital 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 1st Capital Bank, you can compare the effects of market volatilities on Home Federal and 1st Capital 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 1st Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and 1st Capital.
Diversification Opportunities for Home Federal and 1st Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and 1st is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and 1st Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Capital 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 1st Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Capital Bank has no effect on the direction of Home Federal i.e., Home Federal and 1st Capital go up and down completely randomly.
Pair Corralation between Home Federal and 1st Capital
If you would invest 1,330 in Home Federal Bancorp on November 9, 2024 and sell it today you would lose (60.00) from holding Home Federal Bancorp or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Home Federal Bancorp vs. 1st Capital Bank
Performance |
| Timeline |
| Home Federal Bancorp |
| 1st Capital Bank |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Home Federal and 1st Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and 1st Capital
The main advantage of trading using opposite Home Federal and 1st Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, 1st Capital 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 1st Capital will offset losses from the drop in 1st Capital's long position.The idea behind Home Federal Bancorp and 1st Capital 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.| 1st Capital vs. Pacific Valley Bank | 1st Capital vs. Pinnacle Bank | 1st Capital vs. Santa Cruz County | 1st Capital vs. First Northern Community |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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