Correlation Between Lakeland Financial and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both Lakeland Financial 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 Lakeland Financial and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakeland Financial and Home Bancorp, you can compare the effects of market volatilities on Lakeland Financial 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 Lakeland Financial with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Financial and Home Bancorp.
Diversification Opportunities for Lakeland Financial and Home Bancorp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lakeland and Home is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Financial and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and Lakeland 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 Lakeland Financial 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 Lakeland Financial i.e., Lakeland Financial and Home Bancorp go up and down completely randomly.
Pair Corralation between Lakeland Financial and Home Bancorp
Given the investment horizon of 90 days Lakeland Financial is expected to generate 1.19 times less return on investment than Home Bancorp. But when comparing it to its historical volatility, Lakeland Financial is 1.01 times less risky than Home Bancorp. It trades about 0.05 of its potential returns per unit of risk. Home Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,310 in Home Bancorp on September 2, 2024 and sell it today you would earn a total of 1,763 from holding Home Bancorp or generate 53.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lakeland Financial vs. Home Bancorp
Performance |
| Timeline |
| Lakeland Financial |
| Home Bancorp |
Lakeland Financial and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakeland Financial and Home Bancorp
The main advantage of trading using opposite Lakeland Financial and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Financial 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.| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
| Home Bancorp vs. Affinity Bancshares | Home Bancorp vs. Auburn National Bancorporation | Home Bancorp vs. BayCom Corp | Home Bancorp vs. Community West 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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