Correlation Between Lakeland Financial and HMN Financial
Can any of the company-specific risk be diversified away by investing in both Lakeland Financial and HMN 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 Lakeland Financial and HMN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakeland Financial and HMN Financial, you can compare the effects of market volatilities on Lakeland Financial and HMN 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 Lakeland Financial with a short position of HMN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Financial and HMN Financial.
Diversification Opportunities for Lakeland Financial and HMN Financial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lakeland and HMN is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Financial and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and Lakeland 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 Lakeland Financial are associated (or correlated) with HMN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMN Financial has no effect on the direction of Lakeland Financial i.e., Lakeland Financial and HMN Financial go up and down completely randomly.
Pair Corralation between Lakeland Financial and HMN Financial
Given the investment horizon of 90 days Lakeland Financial is expected to generate 1.28 times less return on investment than HMN Financial. But when comparing it to its historical volatility, Lakeland Financial is 1.12 times less risky than HMN Financial. It trades about 0.05 of its potential returns per unit of risk. HMN Financial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,871 in HMN Financial on September 2, 2024 and sell it today you would earn a total of 928.00 from holding HMN Financial or generate 49.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.25% |
| Values | Daily Returns |
Lakeland Financial vs. HMN Financial
Performance |
| Timeline |
| Lakeland Financial |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Lakeland Financial and HMN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakeland Financial and HMN Financial
The main advantage of trading using opposite Lakeland Financial and HMN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Financial position performs unexpectedly, HMN 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 HMN Financial will offset losses from the drop in HMN Financial's long position.| Lakeland Financial vs. Home Bancorp | Lakeland Financial vs. Heritage Financial | Lakeland Financial vs. First Northwest Bancorp | Lakeland Financial vs. HomeTrust Bancshares |
| HMN Financial vs. Magyar Bancorp | HMN Financial vs. Home Federal Bancorp | HMN Financial vs. First Financial Northwest | HMN Financial vs. First Northwest 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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