Correlation Between HMN Financial and National Bankshares
Can any of the company-specific risk be diversified away by investing in both HMN Financial and National Bankshares 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 National Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and National Bankshares, you can compare the effects of market volatilities on HMN Financial and National Bankshares 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 National Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and National Bankshares.
Diversification Opportunities for HMN Financial and National Bankshares
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between HMN and National is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and National Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bankshares 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 National Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bankshares has no effect on the direction of HMN Financial i.e., HMN Financial and National Bankshares go up and down completely randomly.
Pair Corralation between HMN Financial and National Bankshares
If you would invest 2,794 in National Bankshares on November 3, 2024 and sell it today you would earn a total of 145.00 from holding National Bankshares or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
HMN Financial vs. National Bankshares
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| National Bankshares |
HMN Financial and National Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and National Bankshares
The main advantage of trading using opposite HMN Financial and National Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, National Bankshares 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 National Bankshares will offset losses from the drop in National Bankshares' 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 |
| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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