Correlation Between Home Federal and Westbury Bancorp
Can any of the company-specific risk be diversified away by investing in both Home Federal and Westbury 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 Westbury 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 Westbury Bancorp, you can compare the effects of market volatilities on Home Federal and Westbury 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 Westbury Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Westbury Bancorp.
Diversification Opportunities for Home Federal and Westbury Bancorp
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Westbury is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Westbury Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westbury 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 Westbury Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westbury Bancorp has no effect on the direction of Home Federal i.e., Home Federal and Westbury Bancorp go up and down completely randomly.
Pair Corralation between Home Federal and Westbury Bancorp
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 98.87 times more return on investment than Westbury Bancorp. However, Home Federal is 98.87 times more volatile than Westbury Bancorp. It trades about 0.04 of its potential returns per unit of risk. Westbury Bancorp is currently generating about 0.12 per unit of risk. If you would invest 1,633 in Home Federal Bancorp on August 25, 2024 and sell it today you would lose (393.00) from holding Home Federal Bancorp or give up 24.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 10.02% |
| Values | Daily Returns |
Home Federal Bancorp vs. Westbury Bancorp
Performance |
| Timeline |
| Home Federal Bancorp |
| Westbury Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Federal and Westbury Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Federal and Westbury Bancorp
The main advantage of trading using opposite Home Federal and Westbury Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Westbury 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 Westbury Bancorp will offset losses from the drop in Westbury Bancorp's long position.The idea behind Home Federal Bancorp and Westbury 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.| Westbury Bancorp vs. Home Federal Bancorp | Westbury Bancorp vs. First Northwest Bancorp | Westbury Bancorp vs. First Community | Westbury Bancorp vs. Oak Valley 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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