Correlation Between HMN Financial and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both HMN Financial and Northeast Bancorp 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 Northeast Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and Northeast Bancorp, you can compare the effects of market volatilities on HMN Financial and Northeast Bancorp 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 Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Northeast Bancorp.
Diversification Opportunities for HMN Financial and Northeast Bancorp
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HMN and Northeast is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast 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 Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of HMN Financial i.e., HMN Financial and Northeast Bancorp go up and down completely randomly.
Pair Corralation between HMN Financial and Northeast Bancorp
If you would invest 8,838 in Northeast Bancorp on September 2, 2024 and sell it today you would earn a total of 1,007 from holding Northeast Bancorp or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
HMN Financial vs. Northeast Bancorp
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Northeast Bancorp |
HMN Financial and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and Northeast Bancorp
The main advantage of trading using opposite HMN Financial and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, Northeast Bancorp 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 Northeast Bancorp will offset losses from the drop in Northeast Bancorp'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 |
| Northeast Bancorp vs. Home Federal Bancorp | Northeast Bancorp vs. Mainstreet Bank | Northeast Bancorp vs. Investar Holding Corp | Northeast Bancorp vs. Magyar 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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