Correlation Between IF Bancorp and Income Opportunity

Can any of the company-specific risk be diversified away by investing in both IF Bancorp and Income Opportunity 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 IF Bancorp and Income Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for IF Bancorp and Income Opportunity

0.18

Correlation Coefficient

IF Bancorp  Income Opportunity

Average diversification

The 3 months correlation between IROQ and Income is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding IF Bancorp and Income Opportunity Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Opportunity Realty and IF 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 IF Bancorp are associated (or correlated) with Income Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Opportunity Realty has no effect on the direction of IF Bancorp i.e., IF Bancorp and Income Opportunity go up and down completely randomly.

Pair Corralation between IF Bancorp and Income Opportunity

Given the investment horizon of 90 days IF Bancorp is expected to generate 0.8 times more return on investment than Income Opportunity. However, IF Bancorp is 1.25 times less risky than Income Opportunity. It trades about 0.1 of its potential returns per unit of risk. Income Opportunity Realty is currently generating about 0.02 per unit of risk. If you would invest  1,911  in IF Bancorp on December 5, 2024 and sell it today you would earn a total of  514.00  from holding IF Bancorp or generate 26.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.42%
Values	Daily Returns

IF Bancorp  vs.  Income Opportunity Realty

IF Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IF Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, IF Bancorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Income Opportunity Realty

Risk-Adjusted Performance

Weak

Over the last 90 days Income Opportunity Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Income Opportunity is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IF Bancorp and Income Opportunity

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

The idea behind IF Bancorp and Income Opportunity Realty 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.