Correlation Between Northway Financial and Home Federal
Can any of the company-specific risk be diversified away by investing in both Northway 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 Northway 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 Northway Financial and Home Federal Bancorp, you can compare the effects of market volatilities on Northway 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 Northway Financial with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northway Financial and Home Federal.
Diversification Opportunities for Northway Financial and Home Federal
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Northway and Home is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Northway Financial 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 Northway 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 Northway Financial 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 Northway Financial i.e., Northway Financial and Home Federal go up and down completely randomly.
Pair Corralation between Northway Financial and Home Federal
If you would invest 1,295 in Home Federal Bancorp on September 1, 2024 and sell it today you would lose (59.00) from holding Home Federal Bancorp or give up 4.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.58% |
| Values | Daily Returns |
Northway Financial vs. Home Federal Bancorp
Performance |
| Timeline |
| Northway Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Home Federal Bancorp |
Northway Financial and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northway Financial and Home Federal
The main advantage of trading using opposite Northway Financial and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northway 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.| Northway Financial vs. Katahdin Bankshares Corp | Northway Financial vs. First Northern Community | Northway Financial vs. Pacific Financial Corp | Northway Financial vs. QNB Corp |
| Home Federal vs. Affinity Bancshares | Home Federal vs. Southern California Bancorp | Home Federal vs. Auburn National Bancorporation | Home Federal vs. BayCom Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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