Correlation Between International Bancshares and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both International Bancshares and Home 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 International Bancshares and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Bancshares and Home Bancorp, you can compare the effects of market volatilities on International Bancshares and Home 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 International Bancshares with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Bancshares and Home Bancorp.
Diversification Opportunities for International Bancshares and Home Bancorp
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between International and Home is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding International Bancshares and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and International Bancshares 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 International Bancshares are associated (or correlated) with Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of International Bancshares i.e., International Bancshares and Home Bancorp go up and down completely randomly.
Pair Corralation between International Bancshares and Home Bancorp
Given the investment horizon of 90 days International Bancshares is expected to generate 1.11 times less return on investment than Home Bancorp. In addition to that, International Bancshares is 1.21 times more volatile than Home Bancorp. It trades about 0.12 of its total potential returns per unit of risk. Home Bancorp is currently generating about 0.16 per unit of volatility. If you would invest 4,119 in Home Bancorp on September 12, 2024 and sell it today you would earn a total of 917.00 from holding Home Bancorp or generate 22.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Bancshares vs. Home Bancorp
Performance |
| Timeline |
| International Bancshares |
| Home Bancorp |
International Bancshares and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Bancshares and Home Bancorp
The main advantage of trading using opposite International Bancshares and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Bancshares position performs unexpectedly, Home 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 Home Bancorp will offset losses from the drop in Home Bancorp's long position.| International Bancshares vs. Home Federal Bancorp | International Bancshares vs. First Financial Northwest | International Bancshares vs. First Northwest Bancorp | International Bancshares vs. First Capital |
| Home Bancorp vs. Comerica | Home Bancorp vs. Truist Financial Corp | Home Bancorp vs. Fifth Third Bancorp | Home Bancorp vs. Regions Financial |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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