Correlation Between Heartland Financial and Heritage Commerce
Can any of the company-specific risk be diversified away by investing in both Heartland Financial and Heritage Commerce 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 Heritage Commerce 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 Heritage Commerce Corp, you can compare the effects of market volatilities on Heartland Financial and Heritage Commerce 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 Heritage Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and Heritage Commerce.
Diversification Opportunities for Heartland Financial and Heritage Commerce
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heartland and Heritage is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and Heritage Commerce Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Commerce Corp 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 Heritage Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Commerce Corp has no effect on the direction of Heartland Financial i.e., Heartland Financial and Heritage Commerce go up and down completely randomly.
Pair Corralation between Heartland Financial and Heritage Commerce
Given the investment horizon of 90 days Heartland Financial USA is expected to generate 1.08 times more return on investment than Heritage Commerce. However, Heartland Financial is 1.08 times more volatile than Heritage Commerce Corp. It trades about 0.25 of its potential returns per unit of risk. Heritage Commerce Corp is currently generating about 0.16 per unit of risk. If you would invest 5,783 in Heartland Financial USA on August 27, 2024 and sell it today you would earn a total of 1,112 from holding Heartland Financial USA or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Financial USA vs. Heritage Commerce Corp
Performance |
| Timeline |
| Heartland Financial USA |
| Heritage Commerce Corp |
Heartland Financial and Heritage Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Financial and Heritage Commerce
The main advantage of trading using opposite Heartland Financial and Heritage Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Financial position performs unexpectedly, Heritage Commerce 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 Heritage Commerce will offset losses from the drop in Heritage Commerce's 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 |
| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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