Correlation Between HMN Financial and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both HMN Financial and LINKBANCORP 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 LINKBANCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and LINKBANCORP, you can compare the effects of market volatilities on HMN Financial and LINKBANCORP 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 LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and LINKBANCORP.
Diversification Opportunities for HMN Financial and LINKBANCORP
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HMN and LINKBANCORP is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP 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 LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of HMN Financial i.e., HMN Financial and LINKBANCORP go up and down completely randomly.
Pair Corralation between HMN Financial and LINKBANCORP
Given the investment horizon of 90 days HMN Financial is expected to generate 1.14 times more return on investment than LINKBANCORP. However, HMN Financial is 1.14 times more volatile than LINKBANCORP. It trades about 0.1 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.04 per unit of risk. If you would invest 1,974 in HMN Financial on August 27, 2024 and sell it today you would earn a total of 825.00 from holding HMN Financial or generate 41.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.98% |
| Values | Daily Returns |
HMN Financial vs. LINKBANCORP
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| LINKBANCORP |
HMN Financial and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and LINKBANCORP
The main advantage of trading using opposite HMN Financial and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP'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 |
| LINKBANCORP vs. Fifth Third Bancorp | LINKBANCORP vs. Zions Bancorporation | LINKBANCORP vs. Huntington Bancshares Incorporated | LINKBANCORP vs. PNC Financial Services |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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