Correlation Between MNB Holdings and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both MNB Holdings 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 MNB Holdings and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MNB Holdings Corp and Home Bancorp, you can compare the effects of market volatilities on MNB Holdings 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 MNB Holdings with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MNB Holdings and Home Bancorp.
Diversification Opportunities for MNB Holdings and Home Bancorp
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MNB and Home is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MNB Holdings Corp and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and MNB Holdings 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 MNB Holdings Corp 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 MNB Holdings i.e., MNB Holdings and Home Bancorp go up and down completely randomly.
Pair Corralation between MNB Holdings and Home Bancorp
Given the investment horizon of 90 days MNB Holdings Corp is expected to under-perform the Home Bancorp. But the otc stock apears to be less risky and, when comparing its historical volatility, MNB Holdings Corp is 1.04 times less risky than Home Bancorp. The otc stock trades about -0.01 of its potential returns per unit of risk. The Home Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,818 in Home Bancorp on September 3, 2024 and sell it today you would earn a total of 1,291 from holding Home Bancorp or generate 33.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MNB Holdings Corp vs. Home Bancorp
Performance |
| Timeline |
| MNB Holdings Corp |
| Home Bancorp |
MNB Holdings and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MNB Holdings and Home Bancorp
The main advantage of trading using opposite MNB Holdings and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MNB Holdings 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.| MNB Holdings vs. Harbor Bankshares | MNB Holdings vs. Oconee Financial | MNB Holdings vs. Mission Valley Bancorp | MNB Holdings vs. MF Bancorp |
| Home Bancorp vs. JPMorgan Chase Co | Home Bancorp vs. Citigroup | Home Bancorp vs. Wells Fargo | Home Bancorp vs. Toronto Dominion Bank |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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