Correlation Between Home Federal and Peoples Bancorp
Can any of the company-specific risk be diversified away by investing in both Home Federal and Peoples 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 Peoples 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 Peoples Bancorp of, you can compare the effects of market volatilities on Home Federal and Peoples 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 Peoples Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Peoples Bancorp.
Diversification Opportunities for Home Federal and Peoples Bancorp
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Peoples is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Peoples Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples 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 Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of Home Federal i.e., Home Federal and Peoples Bancorp go up and down completely randomly.
Pair Corralation between Home Federal and Peoples Bancorp
Given the investment horizon of 90 days Home Federal Bancorp is expected to under-perform the Peoples Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Home Federal Bancorp is 1.36 times less risky than Peoples Bancorp. The stock trades about -0.02 of its potential returns per unit of risk. The Peoples Bancorp of is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,564 in Peoples Bancorp of on August 27, 2024 and sell it today you would earn a total of 583.00 from holding Peoples Bancorp of or generate 22.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Home Federal Bancorp vs. Peoples Bancorp of
Performance |
| Timeline |
| Home Federal Bancorp |
| Peoples Bancorp |
Home Federal and Peoples Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Peoples Bancorp
The main advantage of trading using opposite Home Federal and Peoples Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Peoples 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 Peoples Bancorp will offset losses from the drop in Peoples Bancorp's long position.The idea behind Home Federal Bancorp and Peoples Bancorp of 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.| Peoples Bancorp vs. Home Federal Bancorp | Peoples Bancorp vs. Investar Holding Corp | Peoples Bancorp vs. Lake Shore Bancorp | Peoples Bancorp vs. Finward 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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