Correlation Between HMN Financial and First Financial
Can any of the company-specific risk be diversified away by investing in both HMN Financial and First Financial 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 First Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and First Financial Bankshares, you can compare the effects of market volatilities on HMN Financial and First Financial 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 First Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and First Financial.
Diversification Opportunities for HMN Financial and First Financial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HMN and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and First Financial Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Financial Bank 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 First Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Financial Bank has no effect on the direction of HMN Financial i.e., HMN Financial and First Financial go up and down completely randomly.
Pair Corralation between HMN Financial and First Financial
If you would invest 3,666 in First Financial Bankshares on August 31, 2024 and sell it today you would earn a total of 502.00 from holding First Financial Bankshares or generate 13.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
HMN Financial vs. First Financial Bankshares
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| First Financial Bank |
HMN Financial and First Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and First Financial
The main advantage of trading using opposite HMN Financial and First Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, First Financial 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 Financial will offset losses from the drop in First Financial'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 |
| First Financial vs. BOK Financial | First Financial vs. Auburn National Bancorporation | First Financial vs. Great Southern Bancorp | First Financial vs. First Guaranty 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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