Correlation Between Home Federal and FNCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Home Federal and FNCB 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 FNCB 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 FNCB Bancorp, you can compare the effects of market volatilities on Home Federal and FNCB 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 FNCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and FNCB Bancorp.
Diversification Opportunities for Home Federal and FNCB Bancorp
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and FNCB is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and FNCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNCB 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 FNCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNCB Bancorp has no effect on the direction of Home Federal i.e., Home Federal and FNCB Bancorp go up and down completely randomly.
Pair Corralation between Home Federal and FNCB Bancorp
If you would invest 1,261 in Home Federal Bancorp on November 3, 2024 and sell it today you would earn a total of 9.00 from holding Home Federal Bancorp or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.88% |
| Values | Daily Returns |
Home Federal Bancorp vs. FNCB Bancorp
Performance |
| Timeline |
| Home Federal Bancorp |
| FNCB Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Federal and FNCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and FNCB Bancorp
The main advantage of trading using opposite Home Federal and FNCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, FNCB 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 FNCB Bancorp will offset losses from the drop in FNCB Bancorp's long position.The idea behind Home Federal Bancorp and FNCB 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.| FNCB Bancorp vs. Home Federal Bancorp | FNCB Bancorp vs. LINKBANCORP | FNCB Bancorp vs. Rhinebeck Bancorp | FNCB Bancorp vs. Lake Shore 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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