Correlation Between Guaranty Bancshares, and Home Federal

Can any of the company-specific risk be diversified away by investing in both Guaranty Bancshares, 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 Guaranty Bancshares, and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guaranty Bancshares, and Home Federal Bancorp, you can compare the effects of market volatilities on Guaranty Bancshares, 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 Guaranty Bancshares, with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guaranty Bancshares, and Home Federal.

Diversification Opportunities for Guaranty Bancshares, and Home Federal

0.56

Correlation Coefficient

Guaranty Bancshares,  Home Federal

Very weak diversification

The 3 months correlation between Guaranty and Home is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Bancshares, 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 Guaranty Bancshares, 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 Guaranty Bancshares, 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 Guaranty Bancshares, i.e., Guaranty Bancshares, and Home Federal go up and down completely randomly.

Pair Corralation between Guaranty Bancshares, and Home Federal

Given the investment horizon of 90 days Guaranty Bancshares, is expected to under-perform the Home Federal. But the stock apears to be less risky and, when comparing its historical volatility, Guaranty Bancshares, is 2.03 times less risky than Home Federal. The stock trades about -0.25 of its potential returns per unit of risk. The Home Federal Bancorp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,288  in Home Federal Bancorp on December 10, 2024 and sell it today you would lose (49.00) from holding Home Federal Bancorp or give up 3.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.0%
Values	Daily Returns

Guaranty Bancshares,  vs.  Home Federal Bancorp

Guaranty Bancshares,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Bancshares, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Guaranty Bancshares, may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Home Federal Bancorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Home Federal Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Home Federal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Guaranty Bancshares, and Home Federal

The main advantage of trading using opposite Guaranty Bancshares, and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guaranty Bancshares, 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.

The idea behind Guaranty Bancshares, and Home Federal Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.