Correlation Between Harbor Bankshares and Home Federal
Can any of the company-specific risk be diversified away by investing in both Harbor Bankshares and Home Federal 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 Harbor Bankshares and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor Bankshares and Home Federal Bancorp, you can compare the effects of market volatilities on Harbor Bankshares and Home Federal 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 Harbor Bankshares with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Bankshares and Home Federal.
Diversification Opportunities for Harbor Bankshares and Home Federal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Harbor and Home is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal Bancorp and Harbor Bankshares 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 Harbor Bankshares are associated (or correlated) with Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of Harbor Bankshares i.e., Harbor Bankshares and Home Federal go up and down completely randomly.
Pair Corralation between Harbor Bankshares and Home Federal
Given the investment horizon of 90 days Harbor Bankshares is expected to generate 13.05 times less return on investment than Home Federal. But when comparing it to its historical volatility, Harbor Bankshares is 17.26 times less risky than Home Federal. It trades about 0.08 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,216 in Home Federal Bancorp on September 4, 2024 and sell it today you would earn a total of 14.00 from holding Home Federal Bancorp or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.24% |
| Values | Daily Returns |
Harbor Bankshares vs. Home Federal Bancorp
Performance |
| Timeline |
| Harbor Bankshares |
| Home Federal Bancorp |
Harbor Bankshares and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbor Bankshares and Home Federal
The main advantage of trading using opposite Harbor Bankshares and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Bankshares position performs unexpectedly, Home Federal 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 Home Federal will offset losses from the drop in Home Federal's long position.| Harbor Bankshares vs. MNB Holdings Corp | Harbor Bankshares vs. Oconee Financial | Harbor Bankshares vs. Mission Valley Bancorp | Harbor Bankshares vs. Merchants Marine Bancorp |
| Home Federal vs. International Bancshares | Home Federal vs. Finward Bancorp | Home Federal vs. Aquagold International | Home Federal vs. Thrivent High Yield |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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