Correlation Between HMN Financial and United Bankshares
Can any of the company-specific risk be diversified away by investing in both HMN Financial and United 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 United 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 United Bankshares, you can compare the effects of market volatilities on HMN Financial and United 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 United Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and United Bankshares.
Diversification Opportunities for HMN Financial and United Bankshares
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HMN and United is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and United Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bankshares has no effect on the direction of HMN Financial i.e., HMN Financial and United Bankshares go up and down completely randomly.
Pair Corralation between HMN Financial and United Bankshares
If you would invest 3,845 in United Bankshares on August 27, 2024 and sell it today you would earn a total of 484.00 from holding United Bankshares or generate 12.59% 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. United Bankshares
Performance |
| Timeline |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| United Bankshares |
HMN Financial and United Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HMN Financial and United Bankshares
The main advantage of trading using opposite HMN Financial and United Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HMN Financial position performs unexpectedly, United 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 United Bankshares will offset losses from the drop in United 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 |
| United Bankshares vs. Peoples Bancorp | United Bankshares vs. Eagle Bancorp | United Bankshares vs. Northrim BanCorp | United Bankshares vs. Pacific Premier 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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