Correlation Between HMN Financial and Old Point
Can any of the company-specific risk be diversified away by investing in both HMN Financial and Old Point 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 Old Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and Old Point Financial, you can compare the effects of market volatilities on HMN Financial and Old Point 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 Old Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Old Point.
Diversification Opportunities for HMN Financial and Old Point
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HMN and Old is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Old Point Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Point Financial 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 Old Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Point Financial has no effect on the direction of HMN Financial i.e., HMN Financial and Old Point go up and down completely randomly.
Pair Corralation between HMN Financial and Old Point
Given the investment horizon of 90 days HMN Financial is expected to generate 0.81 times more return on investment than Old Point. However, HMN Financial is 1.24 times less risky than Old Point. It trades about 0.04 of its potential returns per unit of risk. Old Point Financial is currently generating about 0.01 per unit of risk. If you would invest 2,179 in HMN Financial on August 28, 2024 and sell it today you would earn a total of 620.00 from holding HMN Financial or generate 28.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.29% |
| Values | Daily Returns |
HMN Financial vs. Old Point Financial
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Old Point Financial |
HMN Financial and Old Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and Old Point
The main advantage of trading using opposite HMN Financial and Old Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, Old Point 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 Old Point will offset losses from the drop in Old Point'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 |
| Old Point vs. Fifth Third Bancorp | Old Point vs. Huntington Bancshares Incorporated | Old Point vs. MT Bank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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