Correlation Between Independent Bank and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both Independent Bank and Heritage 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 Independent Bank and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independent Bank and Heritage Financial, you can compare the effects of market volatilities on Independent Bank and Heritage 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 Independent Bank with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independent Bank and Heritage Financial.
Diversification Opportunities for Independent Bank and Heritage Financial
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Independent and Heritage is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Independent Bank and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial and Independent Bank 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 Independent Bank are associated (or correlated) with Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of Independent Bank i.e., Independent Bank and Heritage Financial go up and down completely randomly.
Pair Corralation between Independent Bank and Heritage Financial
Given the investment horizon of 90 days Independent Bank is expected to generate 1.04 times less return on investment than Heritage Financial. In addition to that, Independent Bank is 1.04 times more volatile than Heritage Financial. It trades about 0.1 of its total potential returns per unit of risk. Heritage Financial is currently generating about 0.11 per unit of volatility. If you would invest 1,776 in Heritage Financial on August 27, 2024 and sell it today you would earn a total of 874.00 from holding Heritage Financial or generate 49.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Independent Bank vs. Heritage Financial
Performance |
| Timeline |
| Independent Bank |
| Heritage Financial |
Independent Bank and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independent Bank and Heritage Financial
The main advantage of trading using opposite Independent Bank and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independent Bank position performs unexpectedly, Heritage 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 Heritage Financial will offset losses from the drop in Heritage Financial's long position.| Independent Bank vs. Capitol Federal Financial | Independent Bank vs. BankFinancial | Independent Bank vs. Business First Bancshares | Independent Bank vs. First Bancorp |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Heartland Financial USA | Heritage Financial vs. Independent Bank |
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.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |