Correlation Between Home Federal and 1895 Of

Can any of the company-specific risk be diversified away by investing in both Home Federal and 1895 Of 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 Federal and 1895 Of into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Home Federal Bancorp and 1895 of Wisconsin, you can compare the effects of market volatilities on Home Federal and 1895 Of 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 Federal with a short position of 1895 Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and 1895 Of.

Diversification Opportunities for Home Federal and 1895 Of

-0.21

Correlation Coefficient

Home Federal  1895 Of

Very good diversification

The 3 months correlation between Home and 1895 is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and 1895 of Wisconsin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1895 of Wisconsin and Home Federal 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 Federal Bancorp are associated (or correlated) with 1895 Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1895 of Wisconsin has no effect on the direction of Home Federal i.e., Home Federal and 1895 Of go up and down completely randomly.

Pair Corralation between Home Federal and 1895 Of

Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 5.1 times more return on investment than 1895 Of. However, Home Federal is 5.1 times more volatile than 1895 of Wisconsin. It trades about 0.07 of its potential returns per unit of risk. 1895 of Wisconsin is currently generating about 0.1 per unit of risk. If you would invest  1,227  in Home Federal Bancorp on September 20, 2024 and sell it today you would earn a total of  33.00  from holding Home Federal Bancorp or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Home Federal Bancorp  vs.  1895 of Wisconsin

Home Federal Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Federal Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

1895 of Wisconsin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 1895 of Wisconsin are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, 1895 Of may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Home Federal and 1895 Of

The main advantage of trading using opposite Home Federal and 1895 Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, 1895 Of 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 1895 Of will offset losses from the drop in 1895 Of's long position.

The idea behind Home Federal Bancorp and 1895 of Wisconsin 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.