Correlation Between SmartFinancial, and Home Federal
Can any of the company-specific risk be diversified away by investing in both SmartFinancial, 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 SmartFinancial, and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SmartFinancial, and Home Federal Bancorp, you can compare the effects of market volatilities on SmartFinancial, 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 SmartFinancial, with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartFinancial, and Home Federal.
Diversification Opportunities for SmartFinancial, and Home Federal
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SmartFinancial, and Home is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SmartFinancial, 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 SmartFinancial, 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 SmartFinancial, 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 SmartFinancial, i.e., SmartFinancial, and Home Federal go up and down completely randomly.
Pair Corralation between SmartFinancial, and Home Federal
Given the investment horizon of 90 days SmartFinancial, is expected to generate 20.85 times less return on investment than Home Federal. But when comparing it to its historical volatility, SmartFinancial, is 47.5 times less risky than Home Federal. It trades about 0.2 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,102 in Home Federal Bancorp on August 24, 2024 and sell it today you would earn a total of 127.00 from holding Home Federal Bancorp or generate 11.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.4% |
| Values | Daily Returns |
SmartFinancial, vs. Home Federal Bancorp
Performance |
| Timeline |
| SmartFinancial, |
| Home Federal Bancorp |
SmartFinancial, and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SmartFinancial, and Home Federal
The main advantage of trading using opposite SmartFinancial, and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartFinancial, 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.| SmartFinancial, vs. Home Federal Bancorp | SmartFinancial, vs. Lake Shore Bancorp | SmartFinancial, vs. Community West Bancshares | SmartFinancial, vs. First Financial Northwest |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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