Correlation Between Western New and IF Bancorp
Can any of the company-specific risk be diversified away by investing in both Western New 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 Western New and IF Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western New England and IF Bancorp, you can compare the effects of market volatilities on Western New 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 Western New with a short position of IF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western New and IF Bancorp.
Diversification Opportunities for Western New and IF Bancorp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and IROQ is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Western New England and IF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IF Bancorp and Western New 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 Western New England 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 Western New i.e., Western New and IF Bancorp go up and down completely randomly.
Pair Corralation between Western New and IF Bancorp
Given the investment horizon of 90 days Western New is expected to generate 1.12 times less return on investment than IF Bancorp. But when comparing it to its historical volatility, Western New England is 1.17 times less risky than IF Bancorp. It trades about 0.09 of its potential returns per unit of risk. IF Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,332 in IF Bancorp on August 31, 2024 and sell it today you would earn a total of 847.00 from holding IF Bancorp or generate 63.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.84% |
| Values | Daily Returns |
Western New England vs. IF Bancorp
Performance |
| Timeline |
| Western New England |
| IF Bancorp |
Western New and IF Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western New and IF Bancorp
The main advantage of trading using opposite Western New and IF Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western New 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.| Western New vs. KeyCorp | Western New vs. Comerica | Western New vs. First Horizon National | Western New vs. Western Alliance Bancorporation |
| 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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