Correlation Between HMN Financial and CrossFirst Bankshares
Can any of the company-specific risk be diversified away by investing in both HMN Financial and CrossFirst Bankshares 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 CrossFirst Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and CrossFirst Bankshares, you can compare the effects of market volatilities on HMN Financial and CrossFirst Bankshares 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 CrossFirst Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and CrossFirst Bankshares.
Diversification Opportunities for HMN Financial and CrossFirst Bankshares
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HMN and CrossFirst is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and CrossFirst Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrossFirst Bankshares 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 CrossFirst Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CrossFirst Bankshares has no effect on the direction of HMN Financial i.e., HMN Financial and CrossFirst Bankshares go up and down completely randomly.
Pair Corralation between HMN Financial and CrossFirst Bankshares
Given the investment horizon of 90 days HMN Financial is expected to generate 1.01 times less return on investment than CrossFirst Bankshares. But when comparing it to its historical volatility, HMN Financial is 1.06 times less risky than CrossFirst Bankshares. It trades about 0.04 of its potential returns per unit of risk. CrossFirst Bankshares is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,308 in CrossFirst Bankshares on September 3, 2024 and sell it today you would earn a total of 423.00 from holding CrossFirst Bankshares or generate 32.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.92% |
| Values | Daily Returns |
HMN Financial vs. CrossFirst Bankshares
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| CrossFirst Bankshares |
HMN Financial and CrossFirst Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and CrossFirst Bankshares
The main advantage of trading using opposite HMN Financial and CrossFirst Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, CrossFirst Bankshares 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 CrossFirst Bankshares will offset losses from the drop in CrossFirst Bankshares' 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 |
| CrossFirst Bankshares vs. Home Bancorp | CrossFirst Bankshares vs. Great Southern Bancorp | CrossFirst Bankshares vs. Finward Bancorp | CrossFirst Bankshares vs. Community West Bancshares |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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