Correlation Between BankFinancial and HMN Financial
Can any of the company-specific risk be diversified away by investing in both BankFinancial 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 BankFinancial and HMN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BankFinancial and HMN Financial, you can compare the effects of market volatilities on BankFinancial 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 BankFinancial with a short position of HMN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankFinancial and HMN Financial.
Diversification Opportunities for BankFinancial and HMN Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BankFinancial and HMN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BankFinancial and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and BankFinancial 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 BankFinancial 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 BankFinancial i.e., BankFinancial and HMN Financial go up and down completely randomly.
Pair Corralation between BankFinancial and HMN Financial
If you would invest 975.00 in BankFinancial on December 5, 2024 and sell it today you would earn a total of 288.00 from holding BankFinancial or generate 29.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
BankFinancial vs. HMN Financial
Performance |
| Timeline |
| BankFinancial |
| HMN Financial |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
BankFinancial and HMN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BankFinancial and HMN Financial
The main advantage of trading using opposite BankFinancial and HMN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankFinancial 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.| BankFinancial vs. First Business Financial | ||
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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