Correlation Between Waterstone Financial and IF Bancorp
Can any of the company-specific risk be diversified away by investing in both Waterstone Financial 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 Waterstone Financial and IF Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterstone Financial and IF Bancorp, you can compare the effects of market volatilities on Waterstone Financial 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 Waterstone Financial with a short position of IF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterstone Financial and IF Bancorp.
Diversification Opportunities for Waterstone Financial and IF Bancorp
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Waterstone and IROQ is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and IF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IF Bancorp and Waterstone 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 Waterstone Financial 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 Waterstone Financial i.e., Waterstone Financial and IF Bancorp go up and down completely randomly.
Pair Corralation between Waterstone Financial and IF Bancorp
Given the investment horizon of 90 days Waterstone Financial is expected to generate 1.64 times less return on investment than IF Bancorp. In addition to that, Waterstone Financial is 1.07 times more volatile than IF Bancorp. It trades about 0.06 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 1,372 in IF Bancorp on August 26, 2024 and sell it today you would earn a total of 758.00 from holding IF Bancorp or generate 55.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.57% |
| Values | Daily Returns |
Waterstone Financial vs. IF Bancorp
Performance |
| Timeline |
| Waterstone Financial |
| IF Bancorp |
Waterstone Financial and IF Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterstone Financial and IF Bancorp
The main advantage of trading using opposite Waterstone Financial and IF Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterstone Financial 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.| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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