Correlation Between HMN Financial and First Northwest
Can any of the company-specific risk be diversified away by investing in both HMN Financial and First Northwest 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 Northwest 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 Northwest Bancorp, you can compare the effects of market volatilities on HMN Financial and First Northwest 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 Northwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and First Northwest.
Diversification Opportunities for HMN Financial and First Northwest
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between HMN and First is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and First Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northwest 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 First Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northwest Bancorp has no effect on the direction of HMN Financial i.e., HMN Financial and First Northwest go up and down completely randomly.
Pair Corralation between HMN Financial and First Northwest
Given the investment horizon of 90 days HMN Financial is expected to generate 1.14 times more return on investment than First Northwest. However, HMN Financial is 1.14 times more volatile than First Northwest Bancorp. It trades about 0.08 of its potential returns per unit of risk. First Northwest Bancorp is currently generating about -0.03 per unit of risk. If you would invest 2,688 in HMN Financial on November 2, 2024 and sell it today you would earn a total of 111.00 from holding HMN Financial or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 27.18% |
| Values | Daily Returns |
HMN Financial vs. First Northwest Bancorp
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Northwest Bancorp |
HMN Financial and First Northwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and First Northwest
The main advantage of trading using opposite HMN Financial and First Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, First Northwest 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 Northwest will offset losses from the drop in First Northwest'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 Northwest vs. Home Federal Bancorp | First Northwest vs. Magyar Bancorp | First Northwest vs. First Capital | First Northwest vs. HomeTrust 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |