Correlation Between Hanmi Financial and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Hanmi Financial and Dow Jones 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 Hanmi Financial and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanmi Financial and Dow Jones Industrial, you can compare the effects of market volatilities on Hanmi Financial and Dow Jones 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 Hanmi Financial with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanmi Financial and Dow Jones.
Diversification Opportunities for Hanmi Financial and Dow Jones
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanmi and Dow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hanmi Financial and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Hanmi 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 Hanmi Financial are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Hanmi Financial i.e., Hanmi Financial and Dow Jones go up and down completely randomly.
Pair Corralation between Hanmi Financial and Dow Jones
Given the investment horizon of 90 days Hanmi Financial is expected to generate 3.11 times more return on investment than Dow Jones. However, Hanmi Financial is 3.11 times more volatile than Dow Jones Industrial. It trades about 0.27 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 2,267 in Hanmi Financial on August 28, 2024 and sell it today you would earn a total of 417.00 from holding Hanmi Financial or generate 18.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanmi Financial vs. Dow Jones Industrial
Performance |
| Timeline |
Hanmi Financial and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Hanmi Financial
Pair trading matchups for Hanmi Financial
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Hanmi Financial and Dow Jones
The main advantage of trading using opposite Hanmi Financial and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanmi Financial position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Hanmi Financial vs. OP Bancorp | Hanmi Financial vs. PCB Bancorp | Hanmi Financial vs. Heritage Commerce Corp | Hanmi Financial vs. Riverview Bancorp |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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