Correlation Between Investar Holding and Home Federal
Can any of the company-specific risk be diversified away by investing in both Investar Holding 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 Investar Holding and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investar Holding Corp and Home Federal Bancorp, you can compare the effects of market volatilities on Investar Holding 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 Investar Holding with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investar Holding and Home Federal.
Diversification Opportunities for Investar Holding and Home Federal
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Investar and Home is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp 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 Investar Holding 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 Investar Holding Corp 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 Investar Holding i.e., Investar Holding and Home Federal go up and down completely randomly.
Pair Corralation between Investar Holding and Home Federal
Given the investment horizon of 90 days Investar Holding Corp is expected to under-perform the Home Federal. But the stock apears to be less risky and, when comparing its historical volatility, Investar Holding Corp is 1.12 times less risky than Home Federal. The stock trades about -0.16 of its potential returns per unit of risk. The Home Federal Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,260 in Home Federal Bancorp on October 20, 2024 and sell it today you would earn a total of 22.00 from holding Home Federal Bancorp or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Investar Holding Corp vs. Home Federal Bancorp
Performance |
| Timeline |
| Investar Holding Corp |
| Home Federal Bancorp |
Investar Holding and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investar Holding and Home Federal
The main advantage of trading using opposite Investar Holding and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding 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.| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |