Correlation Between Provident Bancorp and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both Provident Bancorp 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 Provident Bancorp and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Provident Bancorp and Home Bancorp, you can compare the effects of market volatilities on Provident Bancorp 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 Provident Bancorp with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Bancorp and Home Bancorp.
Diversification Opportunities for Provident Bancorp and Home Bancorp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Provident and Home is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Provident Bancorp and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and Provident Bancorp 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 Provident Bancorp 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 Provident Bancorp i.e., Provident Bancorp and Home Bancorp go up and down completely randomly.
Pair Corralation between Provident Bancorp and Home Bancorp
Given the investment horizon of 90 days Provident Bancorp is expected to generate 0.74 times more return on investment than Home Bancorp. However, Provident Bancorp is 1.34 times less risky than Home Bancorp. It trades about 0.29 of its potential returns per unit of risk. Home Bancorp is currently generating about 0.16 per unit of risk. If you would invest 1,037 in Provident Bancorp on September 1, 2024 and sell it today you would earn a total of 111.00 from holding Provident Bancorp or generate 10.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Bancorp vs. Home Bancorp
Performance |
| Timeline |
| Provident Bancorp |
| Home Bancorp |
Provident Bancorp and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Bancorp and Home Bancorp
The main advantage of trading using opposite Provident Bancorp and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Bancorp 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.| Provident Bancorp vs. Home Federal Bancorp | Provident Bancorp vs. Community West Bancshares | Provident Bancorp vs. First Financial Northwest | Provident Bancorp vs. First Northwest Bancorp |
| Home Bancorp vs. Affinity Bancshares | Home Bancorp vs. Southern California Bancorp | Home Bancorp vs. Auburn National Bancorporation | Home Bancorp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |