Correlation Between Orange County and Home Federal
Can any of the company-specific risk be diversified away by investing in both Orange County 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 Orange County and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange County Bancorp and Home Federal Bancorp, you can compare the effects of market volatilities on Orange County 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 Orange County with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange County and Home Federal.
Diversification Opportunities for Orange County and Home Federal
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Orange and Home is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Orange County Bancorp 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 Orange County 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 Orange County Bancorp 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 Orange County i.e., Orange County and Home Federal go up and down completely randomly.
Pair Corralation between Orange County and Home Federal
Considering the 90-day investment horizon Orange County Bancorp is expected to under-perform the Home Federal. But the stock apears to be less risky and, when comparing its historical volatility, Orange County Bancorp is 2.22 times less risky than Home Federal. The stock trades about -0.23 of its potential returns per unit of risk. The Home Federal Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,242 in Home Federal Bancorp on November 1, 2024 and sell it today you would earn a total of 27.99 from holding Home Federal Bancorp or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Orange County Bancorp vs. Home Federal Bancorp
Performance |
| Timeline |
| Orange County Bancorp |
| Home Federal Bancorp |
Orange County and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange County and Home Federal
The main advantage of trading using opposite Orange County and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange County 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.| Orange County vs. Southern States Bancshares | Orange County vs. US Century Bank | Orange County vs. Third Coast Bancshares | Orange County vs. Esquire Financial Holdings |
| Home Federal vs. Magyar Bancorp | Home Federal vs. First Capital | Home Federal vs. HomeTrust Bancshares | Home Federal vs. CF Bankshares |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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