Correlation Between HomeTrust Bancshares and Heartland Financial
Can any of the company-specific risk be diversified away by investing in both HomeTrust Bancshares and Heartland Financial 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 HomeTrust Bancshares and Heartland Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeTrust Bancshares and Heartland Financial USA, you can compare the effects of market volatilities on HomeTrust Bancshares and Heartland Financial 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 HomeTrust Bancshares with a short position of Heartland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeTrust Bancshares and Heartland Financial.
Diversification Opportunities for HomeTrust Bancshares and Heartland Financial
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between HomeTrust and Heartland is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA and HomeTrust Bancshares 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 HomeTrust Bancshares are associated (or correlated) with Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and Heartland Financial go up and down completely randomly.
Pair Corralation between HomeTrust Bancshares and Heartland Financial
Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 1.09 times more return on investment than Heartland Financial. However, HomeTrust Bancshares is 1.09 times more volatile than Heartland Financial USA. It trades about -0.02 of its potential returns per unit of risk. Heartland Financial USA is currently generating about -0.35 per unit of risk. If you would invest 3,686 in HomeTrust Bancshares on November 27, 2024 and sell it today you would lose (31.00) from holding HomeTrust Bancshares or give up 0.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 30.0% |
Values | Daily Returns |
HomeTrust Bancshares vs. Heartland Financial USA
Performance |
Timeline |
HomeTrust Bancshares |
Heartland Financial USA |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
HomeTrust Bancshares and Heartland Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HomeTrust Bancshares and Heartland Financial
The main advantage of trading using opposite HomeTrust Bancshares and Heartland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeTrust Bancshares position performs unexpectedly, Heartland Financial 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 Heartland Financial will offset losses from the drop in Heartland Financial's long position.HomeTrust Bancshares vs. First Northwest Bancorp | ||
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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