Correlation Between Home Federal and Oconee Federal
Can any of the company-specific risk be diversified away by investing in both Home Federal and Oconee Federal 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 Oconee Federal 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 Oconee Federal Financial, you can compare the effects of market volatilities on Home Federal and Oconee Federal 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 Oconee Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Oconee Federal.
Diversification Opportunities for Home Federal and Oconee Federal
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Oconee is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Oconee Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oconee Federal Financial 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 Oconee Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oconee Federal Financial has no effect on the direction of Home Federal i.e., Home Federal and Oconee Federal go up and down completely randomly.
Pair Corralation between Home Federal and Oconee Federal
If you would invest 1,260 in Home Federal Bancorp on October 20, 2024 and sell it today you would earn a total of 22.00 from holding Home Federal Bancorp or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.88% |
| Values | Daily Returns |
Home Federal Bancorp vs. Oconee Federal Financial
Performance |
| Timeline |
| Home Federal Bancorp |
| Oconee Federal Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Federal and Oconee Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Oconee Federal
The main advantage of trading using opposite Home Federal and Oconee Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Oconee Federal 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 Oconee Federal will offset losses from the drop in Oconee Federal's long position.The idea behind Home Federal Bancorp and Oconee Federal Financial 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.| Oconee Federal vs. Home Federal Bancorp | Oconee Federal vs. Community West Bancshares | Oconee Federal vs. Magyar 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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