Correlation Between First Capital and HomeTrust Bancshares
Can any of the company-specific risk be diversified away by investing in both First Capital and HomeTrust 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 First Capital and HomeTrust Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Capital and HomeTrust Bancshares, you can compare the effects of market volatilities on First Capital and HomeTrust 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 First Capital with a short position of HomeTrust Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Capital and HomeTrust Bancshares.
Diversification Opportunities for First Capital and HomeTrust Bancshares
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and HomeTrust is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Capital and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and First Capital 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 First Capital are associated (or correlated) with HomeTrust Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeTrust Bancshares has no effect on the direction of First Capital i.e., First Capital and HomeTrust Bancshares go up and down completely randomly.
Pair Corralation between First Capital and HomeTrust Bancshares
Given the investment horizon of 90 days First Capital is expected to generate 22.06 times less return on investment than HomeTrust Bancshares. But when comparing it to its historical volatility, First Capital is 1.58 times less risky than HomeTrust Bancshares. It trades about 0.01 of its potential returns per unit of risk. HomeTrust Bancshares is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,346 in HomeTrust Bancshares on August 24, 2024 and sell it today you would earn a total of 398.00 from holding HomeTrust Bancshares or generate 11.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Capital vs. HomeTrust Bancshares
Performance |
| Timeline |
| First Capital |
| HomeTrust Bancshares |
First Capital and HomeTrust Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Capital and HomeTrust Bancshares
The main advantage of trading using opposite First Capital and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital position performs unexpectedly, HomeTrust 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 HomeTrust Bancshares will offset losses from the drop in HomeTrust Bancshares' long position.| First Capital vs. Home Federal Bancorp | First Capital vs. First Financial Northwest | First Capital vs. First Northwest Bancorp | First Capital vs. Community West Bancshares |
| HomeTrust Bancshares vs. First Northwest Bancorp | HomeTrust Bancshares vs. Community West Bancshares | HomeTrust Bancshares vs. First Financial Northwest | HomeTrust Bancshares vs. Great Southern 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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