Correlation Between TC Bancshares and Home Federal

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

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

Diversification Opportunities for TC Bancshares and Home Federal

-0.19

Correlation Coefficient

TC Bancshares  Home Federal

Good diversification

The 3 months correlation between TCBC and Home is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding TC Bancshares and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal Bancorp and TC Bancshares 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 TC Bancshares are associated (or correlated) with Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of TC Bancshares i.e., TC Bancshares and Home Federal go up and down completely randomly.

Pair Corralation between TC Bancshares and Home Federal

If you would invest  1,250  in Home Federal Bancorp on September 2, 2024 and sell it today you would lose (14.00) from holding Home Federal Bancorp or give up 1.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.72%
Values	Daily Returns

TC Bancshares  vs.  Home Federal Bancorp

TC Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TC Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, TC Bancshares is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 inconsistent fundamental drivers, Home Federal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TC Bancshares and Home Federal

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

The idea behind TC Bancshares and Home Federal 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.