Correlation Between Auburn National and HMN Financial
Can any of the company-specific risk be diversified away by investing in both Auburn National and HMN Financial 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 Auburn National and HMN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auburn National Bancorporation and HMN Financial, you can compare the effects of market volatilities on Auburn National and HMN Financial 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 Auburn National with a short position of HMN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn National and HMN Financial.
Diversification Opportunities for Auburn National and HMN Financial
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Auburn and HMN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and Auburn National 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 Auburn National Bancorporation are associated (or correlated) with HMN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMN Financial has no effect on the direction of Auburn National i.e., Auburn National and HMN Financial go up and down completely randomly.
Pair Corralation between Auburn National and HMN Financial
If you would invest 2,170 in Auburn National Bancorporation on August 31, 2024 and sell it today you would earn a total of 190.00 from holding Auburn National Bancorporation or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Auburn National Bancorp. vs. HMN Financial
Performance |
| Timeline |
| Auburn National Banc |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Auburn National and HMN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auburn National and HMN Financial
The main advantage of trading using opposite Auburn National and HMN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National position performs unexpectedly, HMN Financial 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 HMN Financial will offset losses from the drop in HMN Financial's long position.| Auburn National vs. Home Federal Bancorp | Auburn National vs. LINKBANCORP | Auburn National vs. Affinity Bancshares | Auburn National vs. Southern California Bancorp |
| HMN Financial vs. Magyar Bancorp | HMN Financial vs. Home Federal Bancorp | HMN Financial vs. First Financial Northwest | HMN Financial vs. First Northwest Bancorp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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