Correlation Between Civista Bancshares and HMN Financial
Can any of the company-specific risk be diversified away by investing in both Civista Bancshares 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 Civista Bancshares and HMN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Civista Bancshares and HMN Financial, you can compare the effects of market volatilities on Civista Bancshares 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 Civista Bancshares with a short position of HMN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civista Bancshares and HMN Financial.
Diversification Opportunities for Civista Bancshares and HMN Financial
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Civista and HMN is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Civista Bancshares and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and Civista 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 Civista Bancshares 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 Civista Bancshares i.e., Civista Bancshares and HMN Financial go up and down completely randomly.
Pair Corralation between Civista Bancshares and HMN Financial
Given the investment horizon of 90 days Civista Bancshares is expected to generate 1.97 times less return on investment than HMN Financial. In addition to that, Civista Bancshares is 1.04 times more volatile than HMN Financial. It trades about 0.02 of its total potential returns per unit of risk. HMN Financial is currently generating about 0.03 per unit of volatility. If you would invest 2,219 in HMN Financial on August 24, 2024 and sell it today you would earn a total of 580.00 from holding HMN Financial or generate 26.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 92.94% |
| Values | Daily Returns |
Civista Bancshares vs. HMN Financial
Performance |
| Timeline |
| Civista Bancshares |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Civista Bancshares and HMN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Civista Bancshares and HMN Financial
The main advantage of trading using opposite Civista Bancshares and HMN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civista Bancshares 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.| Civista Bancshares vs. Home Federal Bancorp | Civista Bancshares vs. First Financial Northwest | Civista Bancshares vs. First Northwest Bancorp | Civista Bancshares vs. First Capital |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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