Correlation Between HMN Financial and ACNB
Can any of the company-specific risk be diversified away by investing in both HMN Financial and ACNB 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 HMN Financial and ACNB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and ACNB Corporation, you can compare the effects of market volatilities on HMN Financial and ACNB 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 HMN Financial with a short position of ACNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and ACNB.
Diversification Opportunities for HMN Financial and ACNB
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HMN and ACNB is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and ACNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACNB and HMN 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 HMN Financial are associated (or correlated) with ACNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACNB has no effect on the direction of HMN Financial i.e., HMN Financial and ACNB go up and down completely randomly.
Pair Corralation between HMN Financial and ACNB
Given the investment horizon of 90 days HMN Financial is expected to generate 1.34 times less return on investment than ACNB. But when comparing it to its historical volatility, HMN Financial is 1.34 times less risky than ACNB. It trades about 0.04 of its potential returns per unit of risk. ACNB Corporation is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,568 in ACNB Corporation on August 27, 2024 and sell it today you would earn a total of 1,228 from holding ACNB Corporation or generate 34.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.74% |
| Values | Daily Returns |
HMN Financial vs. ACNB Corp.
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| ACNB |
HMN Financial and ACNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and ACNB
The main advantage of trading using opposite HMN Financial and ACNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, ACNB 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 ACNB will offset losses from the drop in ACNB's long position.| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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