Correlation Between Heartland Financial and HomeTrust Bancshares
Can any of the company-specific risk be diversified away by investing in both Heartland Financial and HomeTrust 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 Heartland Financial and HomeTrust Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Financial USA and HomeTrust Bancshares, you can compare the effects of market volatilities on Heartland Financial and HomeTrust 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 Heartland Financial with a short position of HomeTrust Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and HomeTrust Bancshares.
Diversification Opportunities for Heartland Financial and HomeTrust Bancshares
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heartland and HomeTrust is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and Heartland 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 Heartland Financial USA are associated (or correlated) with HomeTrust Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeTrust Bancshares has no effect on the direction of Heartland Financial i.e., Heartland Financial and HomeTrust Bancshares go up and down completely randomly.
Pair Corralation between Heartland Financial and HomeTrust Bancshares
Given the investment horizon of 90 days Heartland Financial is expected to generate 1.68 times less return on investment than HomeTrust Bancshares. But when comparing it to its historical volatility, Heartland Financial USA is 1.18 times less risky than HomeTrust Bancshares. It trades about 0.29 of its potential returns per unit of risk. HomeTrust Bancshares is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 3,267 in HomeTrust Bancshares on November 9, 2024 and sell it today you would earn a total of 524.00 from holding HomeTrust Bancshares or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Heartland Financial USA vs. HomeTrust Bancshares
Performance |
| Timeline |
| Heartland Financial USA |
| HomeTrust Bancshares |
Heartland Financial and HomeTrust Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Financial and HomeTrust Bancshares
The main advantage of trading using opposite Heartland Financial and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Financial position performs unexpectedly, HomeTrust 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 HomeTrust Bancshares will offset losses from the drop in HomeTrust Bancshares' long position.| Heartland Financial vs. Heritage Commerce Corp | Heartland Financial vs. Business First Bancshares | Heartland Financial vs. German American Bancorp | Heartland Financial vs. Texas Capital Bancshares |
| HomeTrust Bancshares vs. First Northwest Bancorp | HomeTrust Bancshares vs. Community West Bancshares | HomeTrust Bancshares vs. First Financial Northwest | HomeTrust Bancshares vs. Great Southern 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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