Correlation Between Home Federal and Partners Bancorp

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

Diversification Opportunities for Home Federal and Partners Bancorp

0.15

Correlation Coefficient

Home Federal  Partners Bancorp

Average diversification

The 3 months correlation between Home and Partners is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Partners Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners 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 Partners Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Bancorp has no effect on the direction of Home Federal i.e., Home Federal and Partners Bancorp go up and down completely randomly.

Pair Corralation between Home Federal and Partners Bancorp

If you would invest  1,216  in Home Federal Bancorp on August 31, 2024 and sell it today you would earn a total of  20.00  from holding Home Federal Bancorp or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Home Federal Bancorp  vs.  Partners Bancorp

Home Federal Bancorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Home Federal Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Home Federal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Partners Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Partners Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Partners Bancorp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Home Federal and Partners Bancorp

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

The idea behind Home Federal Bancorp and Partners Bancorp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..