Correlation Between Heritage Financial and QCR Holdings
Can any of the company-specific risk be diversified away by investing in both Heritage Financial and QCR Holdings 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 Heritage Financial and QCR Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Financial and QCR Holdings, you can compare the effects of market volatilities on Heritage Financial and QCR Holdings 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 Heritage Financial with a short position of QCR Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Financial and QCR Holdings.
Diversification Opportunities for Heritage Financial and QCR Holdings
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heritage and QCR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Financial and QCR Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QCR Holdings and Heritage Financial 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 Heritage Financial are associated (or correlated) with QCR Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QCR Holdings has no effect on the direction of Heritage Financial i.e., Heritage Financial and QCR Holdings go up and down completely randomly.
Pair Corralation between Heritage Financial and QCR Holdings
Given the investment horizon of 90 days Heritage Financial is expected to generate 1.16 times more return on investment than QCR Holdings. However, Heritage Financial is 1.16 times more volatile than QCR Holdings. It trades about 0.21 of its potential returns per unit of risk. QCR Holdings is currently generating about 0.22 per unit of risk. If you would invest 2,275 in Heritage Financial on August 27, 2024 and sell it today you would earn a total of 375.00 from holding Heritage Financial or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Financial vs. QCR Holdings
Performance |
| Timeline |
| Heritage Financial |
| QCR Holdings |
Heritage Financial and QCR Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Financial and QCR Holdings
The main advantage of trading using opposite Heritage Financial and QCR Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Financial position performs unexpectedly, QCR Holdings 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 QCR Holdings will offset losses from the drop in QCR Holdings' long position.| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
| QCR Holdings vs. Community West Bancshares | QCR Holdings vs. First Financial Northwest | QCR Holdings vs. CF Bankshares | QCR Holdings vs. Home Federal 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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