Correlation Between Heartland Financial and IF Bancorp
Can any of the company-specific risk be diversified away by investing in both Heartland Financial and IF 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 Heartland Financial and IF Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Financial USA and IF Bancorp, you can compare the effects of market volatilities on Heartland Financial and IF 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 Heartland Financial with a short position of IF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and IF Bancorp.
Diversification Opportunities for Heartland Financial and IF Bancorp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heartland and IROQ is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and IF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IF Bancorp and Heartland 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 Heartland Financial USA are associated (or correlated) with IF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IF Bancorp has no effect on the direction of Heartland Financial i.e., Heartland Financial and IF Bancorp go up and down completely randomly.
Pair Corralation between Heartland Financial and IF Bancorp
Given the investment horizon of 90 days Heartland Financial USA is expected to generate 1.2 times more return on investment than IF Bancorp. However, Heartland Financial is 1.2 times more volatile than IF Bancorp. It trades about 0.05 of its potential returns per unit of risk. IF Bancorp is currently generating about 0.04 per unit of risk. If you would invest 4,416 in Heartland Financial USA on September 3, 2024 and sell it today you would earn a total of 2,341 from holding Heartland Financial USA or generate 53.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.21% |
| Values | Daily Returns |
Heartland Financial USA vs. IF Bancorp
Performance |
| Timeline |
| Heartland Financial USA |
| IF Bancorp |
Heartland Financial and IF Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Financial and IF Bancorp
The main advantage of trading using opposite Heartland Financial and IF Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Financial position performs unexpectedly, IF 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 IF Bancorp will offset losses from the drop in IF Bancorp's long position.| Heartland Financial vs. Heritage Commerce Corp | Heartland Financial vs. Business First Bancshares | Heartland Financial vs. German American Bancorp | Heartland Financial vs. Texas Capital Bancshares |
| IF Bancorp vs. Home Bancorp | IF Bancorp vs. Commerzbank AG PK | IF Bancorp vs. ConnectOne Bancorp | IF Bancorp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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