Correlation Between Bankwell Financial and HMN Financial
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial 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 Bankwell Financial and HMN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankwell Financial Group and HMN Financial, you can compare the effects of market volatilities on Bankwell Financial 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 Bankwell Financial with a short position of HMN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and HMN Financial.
Diversification Opportunities for Bankwell Financial and HMN Financial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bankwell and HMN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and Bankwell Financial 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 Bankwell Financial Group 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 Bankwell Financial i.e., Bankwell Financial and HMN Financial go up and down completely randomly.
Pair Corralation between Bankwell Financial and HMN Financial
Given the investment horizon of 90 days Bankwell Financial is expected to generate 1.0 times less return on investment than HMN Financial. In addition to that, Bankwell Financial is 1.06 times more volatile than HMN Financial. It trades about 0.11 of its total potential returns per unit of risk. HMN Financial is currently generating about 0.11 per unit of volatility. If you would invest 2,221 in HMN Financial on August 24, 2024 and sell it today you would earn a total of 578.00 from holding HMN Financial or generate 26.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.0% |
| Values | Daily Returns |
Bankwell Financial Group vs. HMN Financial
Performance |
| Timeline |
| Bankwell Financial |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Bankwell Financial and HMN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankwell Financial and HMN Financial
The main advantage of trading using opposite Bankwell Financial and HMN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial 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.| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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