Correlation Between United Bancorp and Home Federal
Can any of the company-specific risk be diversified away by investing in both United Bancorp 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 United Bancorp and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Bancorp and Home Federal Bancorp, you can compare the effects of market volatilities on United Bancorp 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 United Bancorp with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bancorp and Home Federal.
Diversification Opportunities for United Bancorp and Home Federal
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Home is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Bancorp 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 United 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 United Bancorp 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 United Bancorp i.e., United Bancorp and Home Federal go up and down completely randomly.
Pair Corralation between United Bancorp and Home Federal
Given the investment horizon of 90 days United Bancorp is expected to under-perform the Home Federal. In addition to that, United Bancorp is 1.6 times more volatile than Home Federal Bancorp. It trades about -0.11 of its total potential returns per unit of risk. Home Federal Bancorp is currently generating about -0.01 per unit of volatility. If you would invest 1,268 in Home Federal Bancorp on October 14, 2024 and sell it today you would lose (8.00) from holding Home Federal Bancorp or give up 0.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
United Bancorp vs. Home Federal Bancorp
Performance |
| Timeline |
| United Bancorp |
| Home Federal Bancorp |
United Bancorp and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bancorp and Home Federal
The main advantage of trading using opposite United Bancorp and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bancorp 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.| United Bancorp vs. Rhinebeck Bancorp | United Bancorp vs. Shore Bancshares | United Bancorp vs. First Northwest Bancorp | United Bancorp vs. Community West Bancshares |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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