Correlation Between MVB Financial and Home Federal
Can any of the company-specific risk be diversified away by investing in both MVB Financial 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 MVB Financial and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MVB Financial Corp and Home Federal Bancorp, you can compare the effects of market volatilities on MVB Financial 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 MVB Financial with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of MVB Financial and Home Federal.
Diversification Opportunities for MVB Financial and Home Federal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MVB and Home is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding MVB Financial 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 MVB 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 MVB Financial 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 MVB Financial i.e., MVB Financial and Home Federal go up and down completely randomly.
Pair Corralation between MVB Financial and Home Federal
Given the investment horizon of 90 days MVB Financial Corp is expected to generate 2.08 times more return on investment than Home Federal. However, MVB Financial is 2.08 times more volatile than Home Federal Bancorp. It trades about 0.16 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.03 per unit of risk. If you would invest 1,874 in MVB Financial Corp on September 4, 2024 and sell it today you would earn a total of 285.00 from holding MVB Financial Corp or generate 15.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MVB Financial Corp vs. Home Federal Bancorp
Performance |
| Timeline |
| MVB Financial Corp |
| Home Federal Bancorp |
MVB Financial and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MVB Financial and Home Federal
The main advantage of trading using opposite MVB Financial and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MVB Financial 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.| MVB Financial vs. Community West Bancshares | MVB Financial vs. First Financial Northwest | MVB Financial vs. CF Bankshares | MVB Financial vs. Home Federal Bancorp |
| Home Federal vs. International Bancshares | Home Federal vs. Finward Bancorp | Home Federal vs. Aquagold International | Home Federal vs. Thrivent High Yield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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