Correlation Between SB Financial and Home Bancorp
Can any of the company-specific risk be diversified away by investing in both SB Financial 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 SB Financial and Home Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SB Financial Group and Home Bancorp, you can compare the effects of market volatilities on SB Financial 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 SB Financial with a short position of Home Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SB Financial and Home Bancorp.
Diversification Opportunities for SB Financial and Home Bancorp
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBFG and Home is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SB Financial Group and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and SB 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 SB Financial Group 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 SB Financial i.e., SB Financial and Home Bancorp go up and down completely randomly.
Pair Corralation between SB Financial and Home Bancorp
Given the investment horizon of 90 days SB Financial Group is expected to generate 1.25 times more return on investment than Home Bancorp. However, SB Financial is 1.25 times more volatile than Home Bancorp. It trades about 0.18 of its potential returns per unit of risk. Home Bancorp is currently generating about 0.11 per unit of risk. If you would invest 1,954 in SB Financial Group on August 30, 2024 and sell it today you would earn a total of 221.00 from holding SB Financial Group or generate 11.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SB Financial Group vs. Home Bancorp
Performance |
| Timeline |
| SB Financial Group |
| Home Bancorp |
SB Financial and Home Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SB Financial and Home Bancorp
The main advantage of trading using opposite SB Financial and Home Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SB Financial 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.| SB Financial vs. Home Federal Bancorp | SB Financial vs. Lake Shore Bancorp | SB Financial vs. National Bankshares | SB Financial vs. Sound Financial Bancorp |
| Home Bancorp vs. Home Federal Bancorp | Home Bancorp vs. Community West Bancshares | Home Bancorp vs. First Financial Northwest | Home Bancorp vs. First Capital |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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