Correlation Between Home Federal and FS Bancorp
Can any of the company-specific risk be diversified away by investing in both Home Federal and FS 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 FS 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 FS Bancorp, you can compare the effects of market volatilities on Home Federal and FS 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 FS Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and FS Bancorp.
Diversification Opportunities for Home Federal and FS Bancorp
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and FSBW is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS 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 FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Home Federal i.e., Home Federal and FS Bancorp go up and down completely randomly.
Pair Corralation between Home Federal and FS Bancorp
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 30.85 times more return on investment than FS Bancorp. However, Home Federal is 30.85 times more volatile than FS Bancorp. It trades about 0.06 of its potential returns per unit of risk. FS Bancorp is currently generating about 0.07 per unit of risk. If you would invest 1,326 in Home Federal Bancorp on August 28, 2024 and sell it today you would lose (90.00) from holding Home Federal Bancorp or give up 6.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.87% |
| Values | Daily Returns |
Home Federal Bancorp vs. FS Bancorp
Performance |
| Timeline |
| Home Federal Bancorp |
| FS Bancorp |
Home Federal and FS Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and FS Bancorp
The main advantage of trading using opposite Home Federal and FS Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, FS 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 FS Bancorp will offset losses from the drop in FS Bancorp's long position.| Home Federal vs. Fifth Third Bancorp | Home Federal vs. Zions Bancorporation | Home Federal vs. Huntington Bancshares Incorporated | Home Federal vs. Comerica |
| FS Bancorp vs. Fifth Third Bancorp | FS Bancorp vs. Zions Bancorporation | FS Bancorp vs. Huntington Bancshares Incorporated | FS Bancorp vs. Comerica |
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.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |