Correlation Between Home Bancorp and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both Home Bancorp and Bankwell Financial 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 Home Bancorp and Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Bancorp and Bankwell Financial Group, you can compare the effects of market volatilities on Home Bancorp and Bankwell Financial 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 Home Bancorp with a short position of Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Bancorp and Bankwell Financial.
Diversification Opportunities for Home Bancorp and Bankwell Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Bankwell is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Home Bancorp and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial and Home 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 Home Bancorp are associated (or correlated) with Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of Home Bancorp i.e., Home Bancorp and Bankwell Financial go up and down completely randomly.
Pair Corralation between Home Bancorp and Bankwell Financial
Given the investment horizon of 90 days Home Bancorp is expected to generate 1.09 times more return on investment than Bankwell Financial. However, Home Bancorp is 1.09 times more volatile than Bankwell Financial Group. It trades about 0.04 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.03 per unit of risk. If you would invest 3,802 in Home Bancorp on September 6, 2024 and sell it today you would earn a total of 1,211 from holding Home Bancorp or generate 31.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Home Bancorp vs. Bankwell Financial Group
Performance |
Timeline |
Home Bancorp |
Bankwell Financial |
Home Bancorp and Bankwell Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Bancorp and Bankwell Financial
The main advantage of trading using opposite Home Bancorp and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Bancorp position performs unexpectedly, Bankwell Financial 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 Bankwell Financial will offset losses from the drop in Bankwell Financial's long position.Home Bancorp vs. Home Federal Bancorp | Home Bancorp vs. Community West Bancshares | Home Bancorp vs. First Financial Northwest | Home Bancorp vs. First Capital |
Bankwell Financial vs. Finward Bancorp | Bankwell Financial vs. Aquagold International | Bankwell Financial vs. Thrivent High Yield | Bankwell Financial vs. Morningstar Unconstrained Allocation |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |