Correlation Between IF Bancorp and Heartland Financial
Can any of the company-specific risk be diversified away by investing in both IF Bancorp and Heartland Financial 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 Heartland Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IF Bancorp and Heartland Financial USA, you can compare the effects of market volatilities on IF Bancorp and Heartland Financial 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 Heartland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of IF Bancorp and Heartland Financial.
Diversification Opportunities for IF Bancorp and Heartland Financial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IROQ and Heartland is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding IF Bancorp and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA 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 Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of IF Bancorp i.e., IF Bancorp and Heartland Financial go up and down completely randomly.
Pair Corralation between IF Bancorp and Heartland Financial
Given the investment horizon of 90 days IF Bancorp is expected to generate 1.62 times less return on investment than Heartland Financial. But when comparing it to its historical volatility, IF Bancorp is 1.17 times less risky than Heartland Financial. It trades about 0.13 of its potential returns per unit of risk. Heartland Financial USA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,270 in Heartland Financial USA on September 3, 2024 and sell it today you would earn a total of 2,487 from holding Heartland Financial USA or generate 58.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.0% |
| Values | Daily Returns |
IF Bancorp vs. Heartland Financial USA
Performance |
| Timeline |
| IF Bancorp |
| Heartland Financial USA |
IF Bancorp and Heartland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IF Bancorp and Heartland Financial
The main advantage of trading using opposite IF Bancorp and Heartland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IF Bancorp position performs unexpectedly, Heartland Financial 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 Heartland Financial will offset losses from the drop in Heartland Financial'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 |
| Heartland Financial vs. Heritage Commerce Corp | Heartland Financial vs. Business First Bancshares | Heartland Financial vs. German American Bancorp | Heartland Financial vs. Texas Capital Bancshares |
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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