Correlation Between Home Federal and United Security
Can any of the company-specific risk be diversified away by investing in both Home Federal and United Security 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 United Security 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 United Security Bancshares, you can compare the effects of market volatilities on Home Federal and United Security 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 United Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and United Security.
Diversification Opportunities for Home Federal and United Security
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and United is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and United Security Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Security Banc 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 United Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Security Banc has no effect on the direction of Home Federal i.e., Home Federal and United Security go up and down completely randomly.
Pair Corralation between Home Federal and United Security
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 27.3 times more return on investment than United Security. However, Home Federal is 27.3 times more volatile than United Security Bancshares. It trades about 0.04 of its potential returns per unit of risk. United Security Bancshares is currently generating about 0.06 per unit of risk. If you would invest 1,642 in Home Federal Bancorp on August 28, 2024 and sell it today you would lose (406.00) from holding Home Federal Bancorp or give up 24.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.92% |
| Values | Daily Returns |
Home Federal Bancorp vs. United Security Bancshares
Performance |
| Timeline |
| Home Federal Bancorp |
| United Security Banc |
Home Federal and United Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and United Security
The main advantage of trading using opposite Home Federal and United Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, United Security 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 United Security will offset losses from the drop in United Security's long position.| Home Federal vs. Fifth Third Bancorp | Home Federal vs. Huntington Bancshares Incorporated | Home Federal vs. MT Bank |
| United Security vs. Home Federal Bancorp | United Security vs. Lake Shore Bancorp | United Security vs. Community West Bancshares | United Security vs. First Northwest 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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