Correlation Between Huntington Bancshares and Financial Institutions
Can any of the company-specific risk be diversified away by investing in both Huntington Bancshares and Financial Institutions 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 Huntington Bancshares and Financial Institutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huntington Bancshares Incorporated and Financial Institutions, you can compare the effects of market volatilities on Huntington Bancshares and Financial Institutions 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 Huntington Bancshares with a short position of Financial Institutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Bancshares and Financial Institutions.
Diversification Opportunities for Huntington Bancshares and Financial Institutions
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huntington and Financial is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and Financial Institutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Institutions and Huntington 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 Huntington Bancshares Incorporated are associated (or correlated) with Financial Institutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Institutions has no effect on the direction of Huntington Bancshares i.e., Huntington Bancshares and Financial Institutions go up and down completely randomly.
Pair Corralation between Huntington Bancshares and Financial Institutions
Given the investment horizon of 90 days Huntington Bancshares is expected to generate 1.04 times less return on investment than Financial Institutions. But when comparing it to its historical volatility, Huntington Bancshares Incorporated is 1.18 times less risky than Financial Institutions. It trades about 0.22 of its potential returns per unit of risk. Financial Institutions is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,454 in Financial Institutions on August 27, 2024 and sell it today you would earn a total of 336.00 from holding Financial Institutions or generate 13.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntington Bancshares Incorpor vs. Financial Institutions
Performance |
| Timeline |
| Huntington Bancshares |
| Financial Institutions |
Huntington Bancshares and Financial Institutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntington Bancshares and Financial Institutions
The main advantage of trading using opposite Huntington Bancshares and Financial Institutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares position performs unexpectedly, Financial Institutions 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 Financial Institutions will offset losses from the drop in Financial Institutions' long position.| Huntington Bancshares vs. Zions Bancorporation | Huntington Bancshares vs. Comerica | Huntington Bancshares vs. Western Alliance Bancorporation | Huntington Bancshares vs. US 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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