Correlation Between HMN Financial and Brookline Bancorp
Can any of the company-specific risk be diversified away by investing in both HMN Financial and Brookline Bancorp 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 Brookline Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and Brookline Bancorp, you can compare the effects of market volatilities on HMN Financial and Brookline Bancorp 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 Brookline Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Brookline Bancorp.
Diversification Opportunities for HMN Financial and Brookline Bancorp
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HMN and Brookline is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Brookline Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookline Bancorp 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 Brookline Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookline Bancorp has no effect on the direction of HMN Financial i.e., HMN Financial and Brookline Bancorp go up and down completely randomly.
Pair Corralation between HMN Financial and Brookline Bancorp
Given the investment horizon of 90 days HMN Financial is expected to generate 2.78 times less return on investment than Brookline Bancorp. In addition to that, HMN Financial is 1.0 times more volatile than Brookline Bancorp. It trades about 0.07 of its total potential returns per unit of risk. Brookline Bancorp is currently generating about 0.19 per unit of volatility. If you would invest 1,001 in Brookline Bancorp on August 28, 2024 and sell it today you would earn a total of 272.00 from holding Brookline Bancorp or generate 27.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 49.21% |
| Values | Daily Returns |
HMN Financial vs. Brookline Bancorp
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Brookline Bancorp |
HMN Financial and Brookline Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and Brookline Bancorp
The main advantage of trading using opposite HMN Financial and Brookline Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, Brookline Bancorp 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 Brookline Bancorp will offset losses from the drop in Brookline Bancorp'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 |
| Brookline Bancorp vs. Heritage Commerce Corp | Brookline Bancorp vs. Eastern Bankshares | Brookline Bancorp vs. HarborOne Bancorp | Brookline Bancorp vs. Kearny 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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