Correlation Between Affinity Bancshares and Hawthorn Bancshares
Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and Hawthorn Bancshares 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 Affinity Bancshares and Hawthorn Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affinity Bancshares and Hawthorn Bancshares, you can compare the effects of market volatilities on Affinity Bancshares and Hawthorn Bancshares 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 Affinity Bancshares with a short position of Hawthorn Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and Hawthorn Bancshares.
Diversification Opportunities for Affinity Bancshares and Hawthorn Bancshares
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Affinity and Hawthorn is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Hawthorn Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawthorn Bancshares and Affinity 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 Affinity Bancshares are associated (or correlated) with Hawthorn Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawthorn Bancshares has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Hawthorn Bancshares go up and down completely randomly.
Pair Corralation between Affinity Bancshares and Hawthorn Bancshares
Given the investment horizon of 90 days Affinity Bancshares is expected to generate 10.91 times less return on investment than Hawthorn Bancshares. But when comparing it to its historical volatility, Affinity Bancshares is 3.97 times less risky than Hawthorn Bancshares. It trades about 0.08 of its potential returns per unit of risk. Hawthorn Bancshares is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,808 in Hawthorn Bancshares on September 2, 2024 and sell it today you would earn a total of 432.00 from holding Hawthorn Bancshares or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affinity Bancshares vs. Hawthorn Bancshares
Performance |
| Timeline |
| Affinity Bancshares |
| Hawthorn Bancshares |
Affinity Bancshares and Hawthorn Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affinity Bancshares and Hawthorn Bancshares
The main advantage of trading using opposite Affinity Bancshares and Hawthorn Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, Hawthorn Bancshares 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 Hawthorn Bancshares will offset losses from the drop in Hawthorn Bancshares' long position.| Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
| Hawthorn Bancshares vs. Affinity Bancshares | Hawthorn Bancshares vs. Auburn National Bancorporation | Hawthorn Bancshares vs. First Community | Hawthorn Bancshares vs. LINKBANCORP |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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