Correlation Between WCF Bancorp and HomeStreet

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

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

Diversification Opportunities for WCF Bancorp and HomeStreet

-0.61

Correlation Coefficient

WCF Bancorp  HomeStreet

Excellent diversification

The 3 months correlation between WCF and HomeStreet is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding WCF Bancorp and HomeStreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeStreet and WCF 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 WCF Bancorp are associated (or correlated) with HomeStreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeStreet has no effect on the direction of WCF Bancorp i.e., WCF Bancorp and HomeStreet go up and down completely randomly.

Pair Corralation between WCF Bancorp and HomeStreet

If you would invest  805.00  in WCF Bancorp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding WCF Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

WCF Bancorp  vs.  HomeStreet

WCF Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WCF Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, WCF Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

HomeStreet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeStreet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with WCF Bancorp and HomeStreet

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

The idea behind WCF Bancorp and HomeStreet 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.