Correlation Between HMN Financial and Ames National
Can any of the company-specific risk be diversified away by investing in both HMN Financial and Ames National 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 Ames National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and Ames National, you can compare the effects of market volatilities on HMN Financial and Ames National 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 Ames National. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Ames National.
Diversification Opportunities for HMN Financial and Ames National
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HMN and Ames is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National 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 Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of HMN Financial i.e., HMN Financial and Ames National go up and down completely randomly.
Pair Corralation between HMN Financial and Ames National
Given the investment horizon of 90 days HMN Financial is expected to generate 1.11 times more return on investment than Ames National. However, HMN Financial is 1.11 times more volatile than Ames National. It trades about 0.04 of its potential returns per unit of risk. Ames National is currently generating about -0.01 per unit of risk. If you would invest 2,179 in HMN Financial on August 29, 2024 and sell it today you would earn a total of 620.00 from holding HMN Financial or generate 28.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.34% |
| Values | Daily Returns |
HMN Financial vs. Ames National
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Ames National |
HMN Financial and Ames National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and Ames National
The main advantage of trading using opposite HMN Financial and Ames National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, Ames National 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 Ames National will offset losses from the drop in Ames National'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 |
| Ames National vs. First Community | Ames National vs. Old Point Financial | Ames National vs. Oak Valley Bancorp | Ames National vs. Chemung Financial Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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