Correlation Between Home Federal and Parke Bancorp
Can any of the company-specific risk be diversified away by investing in both Home Federal and Parke 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 Parke 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 Parke Bancorp, you can compare the effects of market volatilities on Home Federal and Parke 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 Parke Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Parke Bancorp.
Diversification Opportunities for Home Federal and Parke Bancorp
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Parke is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Parke Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parke 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 Parke Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parke Bancorp has no effect on the direction of Home Federal i.e., Home Federal and Parke Bancorp go up and down completely randomly.
Pair Corralation between Home Federal and Parke Bancorp
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 25.06 times more return on investment than Parke Bancorp. However, Home Federal is 25.06 times more volatile than Parke Bancorp. It trades about 0.05 of its potential returns per unit of risk. Parke Bancorp is currently generating about 0.06 per unit of risk. If you would invest 1,261 in Home Federal Bancorp on September 1, 2024 and sell it today you would lose (25.00) from holding Home Federal Bancorp or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.1% |
| Values | Daily Returns |
Home Federal Bancorp vs. Parke Bancorp
Performance |
| Timeline |
| Home Federal Bancorp |
| Parke Bancorp |
Home Federal and Parke Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Parke Bancorp
The main advantage of trading using opposite Home Federal and Parke Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Parke 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 Parke Bancorp will offset losses from the drop in Parke Bancorp'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 |
| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West Bancshares |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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