Correlation Between Parke Bancorp and Home Federal

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

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

Diversification Opportunities for Parke Bancorp and Home Federal

0.38

Correlation Coefficient

Parke Bancorp  Home Federal

Weak diversification

The 3 months correlation between Parke and Home is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Parke Bancorp 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 Parke 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 Parke Bancorp 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 Parke Bancorp i.e., Parke Bancorp and Home Federal go up and down completely randomly.

Pair Corralation between Parke Bancorp and Home Federal

Given the investment horizon of 90 days Parke Bancorp is expected to generate 0.64 times more return on investment than Home Federal. However, Parke Bancorp is 1.57 times less risky than Home Federal. It trades about 0.07 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about -0.01 per unit of risk. If you would invest  1,914  in Parke Bancorp on May 3, 2025 and sell it today you would earn a total of  117.00  from holding Parke Bancorp or generate 6.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.71%
Values	Daily Returns

Parke Bancorp  vs.  Home Federal Bancorp

Parke Bancorp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Parke Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Parke Bancorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Home Federal Bancorp

Risk-Adjusted Performance

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 quite persistent fundamental drivers, Home Federal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Parke Bancorp and Home Federal

The main advantage of trading using opposite Parke Bancorp and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parke Bancorp 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 Parke Bancorp 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.