Correlation Between Home Federal and KB Financial
Can any of the company-specific risk be diversified away by investing in both Home Federal and KB 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 KB 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 KB Financial Group, you can compare the effects of market volatilities on Home Federal and KB 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 KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and KB Financial.
Diversification Opportunities for Home Federal and KB Financial
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Home and KB Financial is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group 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 KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Home Federal i.e., Home Federal and KB Financial go up and down completely randomly.
Pair Corralation between Home Federal and KB Financial
Given the investment horizon of 90 days Home Federal is expected to generate 2.54 times less return on investment than KB Financial. In addition to that, Home Federal is 1.48 times more volatile than KB Financial Group. It trades about 0.05 of its total potential returns per unit of risk. KB Financial Group is currently generating about 0.17 per unit of volatility. If you would invest 6,524 in KB Financial Group on September 1, 2024 and sell it today you would earn a total of 369.00 from holding KB Financial Group or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Home Federal Bancorp vs. KB Financial Group
Performance |
| Timeline |
| Home Federal Bancorp |
| KB Financial Group |
Home Federal and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and KB Financial
The main advantage of trading using opposite Home Federal and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, KB 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 KB Financial will offset losses from the drop in KB Financial's long position.| Home Federal vs. Affinity Bancshares | Home Federal vs. Southern California Bancorp | Home Federal vs. Auburn National Bancorporation | Home Federal vs. BayCom Corp |
| KB Financial vs. Banco Santander Brasil | KB Financial vs. CrossFirst Bankshares | KB Financial vs. Banco Bradesco SA | KB Financial vs. CF Bankshares |
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 Stocks Directory module to find actively traded stocks across global markets.
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