Correlation Between Home Federal and Heritage NOLA
Can any of the company-specific risk be diversified away by investing in both Home Federal and Heritage NOLA 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 Heritage NOLA 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 Heritage NOLA Bancorp, you can compare the effects of market volatilities on Home Federal and Heritage NOLA 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 Heritage NOLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Heritage NOLA.
Diversification Opportunities for Home Federal and Heritage NOLA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Home and Heritage is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Heritage NOLA Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage NOLA 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 Heritage NOLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage NOLA Bancorp has no effect on the direction of Home Federal i.e., Home Federal and Heritage NOLA go up and down completely randomly.
Pair Corralation between Home Federal and Heritage NOLA
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 11.44 times more return on investment than Heritage NOLA. However, Home Federal is 11.44 times more volatile than Heritage NOLA Bancorp. It trades about 0.05 of its potential returns per unit of risk. Heritage NOLA Bancorp is currently generating about 0.04 per unit of risk. If you would invest 1,274 in Home Federal Bancorp on September 2, 2024 and sell it today you would lose (38.00) from holding Home Federal Bancorp or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.1% |
| Values | Daily Returns |
Home Federal Bancorp vs. Heritage NOLA Bancorp
Performance |
| Timeline |
| Home Federal Bancorp |
| Heritage NOLA Bancorp |
Home Federal and Heritage NOLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Heritage NOLA
The main advantage of trading using opposite Home Federal and Heritage NOLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Heritage NOLA 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 Heritage NOLA will offset losses from the drop in Heritage NOLA's long position.| Home Federal vs. Affinity Bancshares | Home Federal vs. Auburn National Bancorporation | Home Federal vs. BayCom Corp | Home Federal vs. Community West Bancshares |
| Heritage NOLA vs. Rhinebeck Bancorp | Heritage NOLA vs. Bridgewater Bancshares Depositary | Heritage NOLA vs. Home Federal Bancorp | Heritage NOLA vs. LINKBANCORP |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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