Correlation Between Home Federal and Southern Missouri
Can any of the company-specific risk be diversified away by investing in both Home Federal and Southern Missouri 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 Southern Missouri 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 Southern Missouri Bancorp, you can compare the effects of market volatilities on Home Federal and Southern Missouri 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 Southern Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Federal and Southern Missouri.
Diversification Opportunities for Home Federal and Southern Missouri
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and Southern is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Southern Missouri Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Missouri Bancorp 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 Southern Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Missouri Bancorp has no effect on the direction of Home Federal i.e., Home Federal and Southern Missouri go up and down completely randomly.
Pair Corralation between Home Federal and Southern Missouri
Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 1.49 times more return on investment than Southern Missouri. However, Home Federal is 1.49 times more volatile than Southern Missouri Bancorp. It trades about 0.06 of its potential returns per unit of risk. Southern Missouri Bancorp is currently generating about -0.09 per unit of risk. If you would invest 1,242 in Home Federal Bancorp on December 28, 2024 and sell it today you would earn a total of 66.00 from holding Home Federal Bancorp or generate 5.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 78.69% |
Values | Daily Returns |
Home Federal Bancorp vs. Southern Missouri Bancorp
Performance |
Timeline |
Home Federal Bancorp |
Southern Missouri Bancorp |
Home Federal and Southern Missouri Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Federal and Southern Missouri
The main advantage of trading using opposite Home Federal and Southern Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Federal position performs unexpectedly, Southern Missouri 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 Southern Missouri will offset losses from the drop in Southern Missouri's long position.Home Federal vs. Home Bancorp | Home Federal vs. Rhinebeck Bancorp | Home Federal vs. LINKBANCORP | Home Federal vs. Magyar Bancorp |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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