Correlation Between Prosperity Bancshares and Home Federal
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares 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 Prosperity Bancshares and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Home Federal Bancorp, you can compare the effects of market volatilities on Prosperity Bancshares 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 Prosperity Bancshares with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Home Federal.
Diversification Opportunities for Prosperity Bancshares and Home Federal
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prosperity and Home is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares i.e., Prosperity Bancshares and Home Federal go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Home Federal
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.4 times more return on investment than Home Federal. However, Prosperity Bancshares is 2.48 times less risky than Home Federal. It trades about 0.29 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.01 per unit of risk. If you would invest 7,469 in Prosperity Bancshares on November 9, 2024 and sell it today you would earn a total of 600.00 from holding Prosperity Bancshares or generate 8.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Home Federal Bancorp
Performance |
| Timeline |
| Prosperity Bancshares |
| Home Federal Bancorp |
Prosperity Bancshares and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Home Federal
The main advantage of trading using opposite Prosperity Bancshares and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares 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.| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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