Correlation Between Heritage Commerce and HV Bancorp
Can any of the company-specific risk be diversified away by investing in both Heritage Commerce and HV 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 Heritage Commerce and HV Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Commerce Corp and HV Bancorp, you can compare the effects of market volatilities on Heritage Commerce and HV 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 Heritage Commerce with a short position of HV Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Commerce and HV Bancorp.
Diversification Opportunities for Heritage Commerce and HV Bancorp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Heritage and HVBC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Commerce Corp and HV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HV Bancorp and Heritage Commerce 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 Heritage Commerce Corp are associated (or correlated) with HV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HV Bancorp has no effect on the direction of Heritage Commerce i.e., Heritage Commerce and HV Bancorp go up and down completely randomly.
Pair Corralation between Heritage Commerce and HV Bancorp
Given the investment horizon of 90 days Heritage Commerce is expected to generate 3.06 times less return on investment than HV Bancorp. In addition to that, Heritage Commerce is 1.28 times more volatile than HV Bancorp. It trades about 0.05 of its total potential returns per unit of risk. HV Bancorp is currently generating about 0.2 per unit of volatility. If you would invest 3,400 in HV Bancorp on September 2, 2024 and sell it today you would earn a total of 60.00 from holding HV Bancorp or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 1.61% |
| Values | Daily Returns |
Heritage Commerce Corp vs. HV Bancorp
Performance |
| Timeline |
| Heritage Commerce Corp |
| HV Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Heritage Commerce and HV Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Commerce and HV Bancorp
The main advantage of trading using opposite Heritage Commerce and HV Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Commerce position performs unexpectedly, HV 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 HV Bancorp will offset losses from the drop in HV Bancorp's long position.| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
| HV Bancorp vs. Magyar Bancorp | HV Bancorp vs. Home Federal Bancorp | HV Bancorp vs. Community West Bancshares | HV Bancorp vs. Lake Shore 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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