Correlation Between Huntington Bancshares and First Merchants
Can any of the company-specific risk be diversified away by investing in both Huntington Bancshares and First Merchants 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 First Merchants 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 First Merchants, you can compare the effects of market volatilities on Huntington Bancshares and First Merchants 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 First Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntington Bancshares and First Merchants.
Diversification Opportunities for Huntington Bancshares and First Merchants
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Huntington and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Bancshares Incorpor and First Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Merchants 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 First Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Merchants has no effect on the direction of Huntington Bancshares i.e., Huntington Bancshares and First Merchants go up and down completely randomly.
Pair Corralation between Huntington Bancshares and First Merchants
Given the investment horizon of 90 days Huntington Bancshares is expected to generate 1.27 times less return on investment than First Merchants. But when comparing it to its historical volatility, Huntington Bancshares Incorporated is 1.26 times less risky than First Merchants. It trades about 0.23 of its potential returns per unit of risk. First Merchants is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,716 in First Merchants on August 28, 2024 and sell it today you would earn a total of 713.00 from holding First Merchants or generate 19.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huntington Bancshares Incorpor vs. First Merchants
Performance |
| Timeline |
| Huntington Bancshares |
| First Merchants |
Huntington Bancshares and First Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huntington Bancshares and First Merchants
The main advantage of trading using opposite Huntington Bancshares and First Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Bancshares position performs unexpectedly, First Merchants 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 First Merchants will offset losses from the drop in First Merchants' long position.| Huntington Bancshares vs. Zions Bancorporation | Huntington Bancshares vs. Comerica | Huntington Bancshares vs. Western Alliance Bancorporation | Huntington Bancshares vs. US Bancorp |
| First Merchants vs. Fifth Third Bancorp | First Merchants vs. Huntington Bancshares Incorporated | First Merchants vs. MT Bank |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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