Correlation Between Home Federal and Marker Therapeutics

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

Diversification Opportunities for Home Federal and Marker Therapeutics

-0.13

Correlation Coefficient

Home Federal  Marker Therapeutics

Good diversification

The 3 months correlation between Home and Marker is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Marker Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marker Therapeutics 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 Marker Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marker Therapeutics has no effect on the direction of Home Federal i.e., Home Federal and Marker Therapeutics go up and down completely randomly.

Pair Corralation between Home Federal and Marker Therapeutics

Given the investment horizon of 90 days Home Federal Bancorp is expected to under-perform the Marker Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Home Federal Bancorp is 2.45 times less risky than Marker Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Marker Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Marker Therapeutics on February 5, 2024 and sell it today you would earn a total of  112.00  from holding Marker Therapeutics or generate 36.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.96%
Values	Daily Returns

Home Federal Bancorp  vs.  Marker Therapeutics

Home Federal Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Federal Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Marker Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marker Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Marker Therapeutics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Home Federal and Marker Therapeutics

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

The idea behind Home Federal Bancorp and Marker Therapeutics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.