Correlation Between IF Bancorp and CFSB Bancorp
Can any of the company-specific risk be diversified away by investing in both IF Bancorp and CFSB 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 IF Bancorp and CFSB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IF Bancorp and CFSB Bancorp, you can compare the effects of market volatilities on IF Bancorp and CFSB 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 IF Bancorp with a short position of CFSB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IF Bancorp and CFSB Bancorp.
Diversification Opportunities for IF Bancorp and CFSB Bancorp
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IROQ and CFSB is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding IF Bancorp and CFSB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFSB Bancorp and IF Bancorp 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 IF Bancorp are associated (or correlated) with CFSB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFSB Bancorp has no effect on the direction of IF Bancorp i.e., IF Bancorp and CFSB Bancorp go up and down completely randomly.
Pair Corralation between IF Bancorp and CFSB Bancorp
Given the investment horizon of 90 days IF Bancorp is expected to generate 2.51 times more return on investment than CFSB Bancorp. However, IF Bancorp is 2.51 times more volatile than CFSB Bancorp. It trades about -0.01 of its potential returns per unit of risk. CFSB Bancorp is currently generating about -0.11 per unit of risk. If you would invest 2,184 in IF Bancorp on August 29, 2024 and sell it today you would lose (24.00) from holding IF Bancorp or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IF Bancorp vs. CFSB Bancorp
Performance |
| Timeline |
| IF Bancorp |
| CFSB Bancorp |
IF Bancorp and CFSB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IF Bancorp and CFSB Bancorp
The main advantage of trading using opposite IF Bancorp and CFSB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IF Bancorp position performs unexpectedly, CFSB 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 CFSB Bancorp will offset losses from the drop in CFSB Bancorp's long position.| IF Bancorp vs. Home Bancorp | IF Bancorp vs. Commerzbank AG PK | IF Bancorp vs. ConnectOne Bancorp | IF Bancorp vs. Home Federal Bancorp |
| CFSB Bancorp vs. IF Bancorp | CFSB Bancorp vs. Home Bancorp | CFSB Bancorp vs. Commerzbank AG PK | CFSB Bancorp vs. ConnectOne 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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