Correlation Between Texas Capital and IF Bancorp
Can any of the company-specific risk be diversified away by investing in both Texas Capital and IF 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 Texas Capital and IF Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Texas Capital Bancshares and IF Bancorp, you can compare the effects of market volatilities on Texas Capital and IF 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 Texas Capital with a short position of IF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Texas Capital and IF Bancorp.
Diversification Opportunities for Texas Capital and IF Bancorp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Texas and IROQ is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Texas Capital Bancshares and IF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IF Bancorp and Texas Capital 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 Texas Capital Bancshares are associated (or correlated) with IF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IF Bancorp has no effect on the direction of Texas Capital i.e., Texas Capital and IF Bancorp go up and down completely randomly.
Pair Corralation between Texas Capital and IF Bancorp
Given the investment horizon of 90 days Texas Capital is expected to generate 1.09 times less return on investment than IF Bancorp. In addition to that, Texas Capital is 1.01 times more volatile than IF Bancorp. It trades about 0.1 of its total potential returns per unit of risk. IF Bancorp is currently generating about 0.11 per unit of volatility. If you would invest 1,409 in IF Bancorp on September 3, 2024 and sell it today you would earn a total of 770.00 from holding IF Bancorp or generate 54.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 92.31% |
| Values | Daily Returns |
Texas Capital Bancshares vs. IF Bancorp
Performance |
| Timeline |
| Texas Capital Bancshares |
| IF Bancorp |
Texas Capital and IF Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Texas Capital and IF Bancorp
The main advantage of trading using opposite Texas Capital and IF Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Texas Capital position performs unexpectedly, IF 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 IF Bancorp will offset losses from the drop in IF Bancorp's long position.| Texas Capital vs. JPMorgan Chase Co | Texas Capital vs. Citigroup | Texas Capital vs. Wells Fargo | Texas Capital vs. Toronto Dominion Bank |
| IF Bancorp vs. Home Bancorp | IF Bancorp vs. Commerzbank AG PK | IF Bancorp vs. ConnectOne Bancorp | IF Bancorp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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