Correlation Between QCR Holdings and Home Federal
Can any of the company-specific risk be diversified away by investing in both QCR Holdings 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 QCR Holdings and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QCR Holdings and Home Federal Bancorp, you can compare the effects of market volatilities on QCR Holdings 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 QCR Holdings with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of QCR Holdings and Home Federal.
Diversification Opportunities for QCR Holdings and Home Federal
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between QCR and Home is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding QCR Holdings 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 QCR Holdings 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 QCR Holdings 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 QCR Holdings i.e., QCR Holdings and Home Federal go up and down completely randomly.
Pair Corralation between QCR Holdings and Home Federal
Given the investment horizon of 90 days QCR Holdings is expected to under-perform the Home Federal. But the stock apears to be less risky and, when comparing its historical volatility, QCR Holdings is 2.35 times less risky than Home Federal. The stock trades about -0.02 of its potential returns per unit of risk. The Home Federal Bancorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,276 in Home Federal Bancorp on November 9, 2024 and sell it today you would lose (6.00) from holding Home Federal Bancorp or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
QCR Holdings vs. Home Federal Bancorp
Performance |
| Timeline |
| QCR Holdings |
| Home Federal Bancorp |
QCR Holdings and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QCR Holdings and Home Federal
The main advantage of trading using opposite QCR Holdings and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QCR Holdings 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.| QCR Holdings vs. Community West Bancshares | QCR Holdings vs. First Financial Northwest | QCR Holdings vs. CF Bankshares | QCR Holdings vs. Home Federal 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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