Correlation Between Home Federal and Southern Missouri
Can any of the company-specific risk be diversified away by investing in both Home Federal and Southern Missouri 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 Southern Missouri 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 Southern Missouri Bancorp, you can compare the effects of market volatilities on Home Federal and Southern Missouri 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 Southern Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Southern Missouri.
Diversification Opportunities for Home Federal and Southern Missouri
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Southern is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri 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 Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of Home Federal i.e., Home Federal and Southern Missouri go up and down completely randomly.
Pair Corralation between Home Federal and Southern Missouri
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 29.17 times more return on investment than Southern Missouri. However, Home Federal is 29.17 times more volatile than Southern Missouri Bancorp. It trades about 0.06 of its potential returns per unit of risk. Southern Missouri Bancorp is currently generating about 0.07 per unit of risk. If you would invest 1,279 in Home Federal Bancorp on November 5, 2024 and sell it today you would lose (9.00) from holding Home Federal Bancorp or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.87% |
| Values | Daily Returns |
Home Federal Bancorp vs. Southern Missouri Bancorp
Performance |
| Timeline |
| Home Federal Bancorp |
| Southern Missouri Bancorp |
Home Federal and Southern Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Southern Missouri
The main advantage of trading using opposite Home Federal and Southern Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Southern Missouri 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 Southern Missouri will offset losses from the drop in Southern Missouri's long position.The idea behind Home Federal Bancorp and Southern Missouri Bancorp 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.| Southern Missouri vs. Commerzbank AG | Southern Missouri vs. Investar Holding Corp | Southern Missouri vs. Colony Bankcorp | Southern Missouri vs. Western New England |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |