Correlation Between HMN Financial and Summit Bancshares
Can any of the company-specific risk be diversified away by investing in both HMN Financial and Summit Bancshares 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 Summit Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HMN Financial and Summit Bancshares, you can compare the effects of market volatilities on HMN Financial and Summit Bancshares 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 Summit Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Summit Bancshares.
Diversification Opportunities for HMN Financial and Summit Bancshares
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HMN and Summit is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Summit Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bancshares 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 Summit Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bancshares has no effect on the direction of HMN Financial i.e., HMN Financial and Summit Bancshares go up and down completely randomly.
Pair Corralation between HMN Financial and Summit Bancshares
Given the investment horizon of 90 days HMN Financial is expected to generate 1.01 times less return on investment than Summit Bancshares. But when comparing it to its historical volatility, HMN Financial is 1.08 times less risky than Summit Bancshares. It trades about 0.04 of its potential returns per unit of risk. Summit Bancshares is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,900 in Summit Bancshares on November 1, 2024 and sell it today you would earn a total of 900.00 from holding Summit Bancshares or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.65% |
| Values | Daily Returns |
HMN Financial vs. Summit Bancshares
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Summit Bancshares |
HMN Financial and Summit Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and Summit Bancshares
The main advantage of trading using opposite HMN Financial and Summit Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, Summit Bancshares 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 Summit Bancshares will offset losses from the drop in Summit Bancshares' 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 |
| Summit Bancshares vs. Pioneer Bankcorp | Summit Bancshares vs. Liberty Northwest Bancorp | Summit Bancshares vs. First Community | Summit Bancshares vs. Coeur dAlene 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |