Correlation Between Hilltop Holdings and Red River
Can any of the company-specific risk be diversified away by investing in both Hilltop Holdings and Red River 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 Hilltop Holdings and Red River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilltop Holdings and Red River Bancshares, you can compare the effects of market volatilities on Hilltop Holdings and Red River 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 Hilltop Holdings with a short position of Red River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilltop Holdings and Red River.
Diversification Opportunities for Hilltop Holdings and Red River
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hilltop and Red is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hilltop Holdings and Red River Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red River Bancshares and Hilltop Holdings 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 Hilltop Holdings are associated (or correlated) with Red River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red River Bancshares has no effect on the direction of Hilltop Holdings i.e., Hilltop Holdings and Red River go up and down completely randomly.
Pair Corralation between Hilltop Holdings and Red River
Considering the 90-day investment horizon Hilltop Holdings is expected to generate 3.15 times less return on investment than Red River. In addition to that, Hilltop Holdings is 1.5 times more volatile than Red River Bancshares. It trades about 0.08 of its total potential returns per unit of risk. Red River Bancshares is currently generating about 0.37 per unit of volatility. If you would invest 5,222 in Red River Bancshares on September 1, 2024 and sell it today you would earn a total of 783.00 from holding Red River Bancshares or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilltop Holdings vs. Red River Bancshares
Performance |
| Timeline |
| Hilltop Holdings |
| Red River Bancshares |
Hilltop Holdings and Red River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilltop Holdings and Red River
The main advantage of trading using opposite Hilltop Holdings and Red River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilltop Holdings position performs unexpectedly, Red River 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 Red River will offset losses from the drop in Red River's long position.| Hilltop Holdings vs. Home Federal Bancorp | Hilltop Holdings vs. First Financial Northwest | Hilltop Holdings vs. First Northwest Bancorp | Hilltop Holdings vs. First Capital |
| Red River vs. Home Federal Bancorp | Red River vs. Magyar Bancorp | Red River vs. Community West Bancshares | Red River vs. Rhinebeck 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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