Correlation Between HMN Financial and Provident Bancorp
Can any of the company-specific risk be diversified away by investing in both HMN Financial and Provident 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 Provident 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 Provident Bancorp, you can compare the effects of market volatilities on HMN Financial and Provident 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 Provident Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Provident Bancorp.
Diversification Opportunities for HMN Financial and Provident Bancorp
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HMN and Provident is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Provident Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident 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 Provident Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Bancorp has no effect on the direction of HMN Financial i.e., HMN Financial and Provident Bancorp go up and down completely randomly.
Pair Corralation between HMN Financial and Provident Bancorp
Given the investment horizon of 90 days HMN Financial is expected to generate 1.51 times less return on investment than Provident Bancorp. But when comparing it to its historical volatility, HMN Financial is 1.2 times less risky than Provident Bancorp. It trades about 0.04 of its potential returns per unit of risk. Provident Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 750.00 in Provident Bancorp on September 3, 2024 and sell it today you would earn a total of 417.00 from holding Provident Bancorp or generate 55.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.92% |
| Values | Daily Returns |
HMN Financial vs. Provident Bancorp
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Provident Bancorp |
HMN Financial and Provident Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and Provident Bancorp
The main advantage of trading using opposite HMN Financial and Provident Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, Provident 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 Provident Bancorp will offset losses from the drop in Provident 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 |
| Provident Bancorp vs. Home Federal Bancorp | Provident Bancorp vs. Community West Bancshares | Provident Bancorp vs. First Financial Northwest | Provident Bancorp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |