Correlation Between 2Seventy Bio and Home Federal

Can any of the company-specific risk be diversified away by investing in both 2Seventy Bio 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 2Seventy Bio and Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 2Seventy Bio and Home Federal Bancorp, you can compare the effects of market volatilities on 2Seventy Bio 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 2Seventy Bio with a short position of Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2Seventy Bio and Home Federal.

Diversification Opportunities for 2Seventy Bio and Home Federal

0.43

Correlation Coefficient

2Seventy Bio  Home Federal

Very weak diversification

The 3 months correlation between 2Seventy and Home is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding 2Seventy Bio 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 2Seventy Bio 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 2Seventy Bio 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 2Seventy Bio i.e., 2Seventy Bio and Home Federal go up and down completely randomly.

Pair Corralation between 2Seventy Bio and Home Federal

Given the investment horizon of 90 days 2Seventy Bio is expected to generate 2.46 times more return on investment than Home Federal. However, 2Seventy Bio is 2.46 times more volatile than Home Federal Bancorp. It trades about -0.02 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about -0.08 per unit of risk. If you would invest  584.00  in 2Seventy Bio on February 18, 2024 and sell it today you would lose (104.00) from holding 2Seventy Bio or give up 17.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

2Seventy Bio  vs.  Home Federal Bancorp

2Seventy Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 2Seventy Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

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 latest fragile performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with 2Seventy Bio and Home Federal

The main advantage of trading using opposite 2Seventy Bio and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2Seventy Bio 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 2Seventy Bio 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.