Correlation Between Home Federal and CVCY Old

Can any of the company-specific risk be diversified away by investing in both Home Federal and CVCY Old 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 CVCY Old 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 CVCY Old, you can compare the effects of market volatilities on Home Federal and CVCY Old 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 CVCY Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and CVCY Old.

Diversification Opportunities for Home Federal and CVCY Old

0.0

Correlation Coefficient

Home Federal  CVCY Old

Pay attention - limited upside

The 3 months correlation between Home and CVCY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and CVCY Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVCY Old 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 CVCY Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVCY Old has no effect on the direction of Home Federal i.e., Home Federal and CVCY Old go up and down completely randomly.

Pair Corralation between Home Federal and CVCY Old

If you would invest  1,434  in Home Federal Bancorp on December 1, 2024 and sell it today you would lose (142.00) from holding Home Federal Bancorp or give up 9.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Home Federal Bancorp  vs.  CVCY Old

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 4 (%) 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.

CVCY Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVCY Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, CVCY Old is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Federal and CVCY Old

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

The idea behind Home Federal Bancorp and CVCY Old 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.