Correlation Between HMN Financial and Luther Burbank
Can any of the company-specific risk be diversified away by investing in both HMN Financial and Luther Burbank 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 Luther Burbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and Luther Burbank, you can compare the effects of market volatilities on HMN Financial and Luther Burbank 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 Luther Burbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Luther Burbank.
Diversification Opportunities for HMN Financial and Luther Burbank
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HMN and Luther is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Luther Burbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luther Burbank 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 Luther Burbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luther Burbank has no effect on the direction of HMN Financial i.e., HMN Financial and Luther Burbank go up and down completely randomly.
Pair Corralation between HMN Financial and Luther Burbank
If you would invest 1,003 in Luther Burbank on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Luther Burbank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HMN Financial vs. Luther Burbank
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Luther Burbank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
HMN Financial and Luther Burbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and Luther Burbank
The main advantage of trading using opposite HMN Financial and Luther Burbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, Luther Burbank 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 Luther Burbank will offset losses from the drop in Luther Burbank'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 |
| Luther Burbank vs. First Community | Luther Burbank vs. Community West Bancshares | Luther Burbank vs. First Financial Northwest | Luther Burbank vs. First Northwest Bancorp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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