Correlation Between Meridian Bank and HMN Financial
Can any of the company-specific risk be diversified away by investing in both Meridian Bank 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 Meridian Bank and HMN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Bank and HMN Financial, you can compare the effects of market volatilities on Meridian Bank 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 Meridian Bank with a short position of HMN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Bank and HMN Financial.
Diversification Opportunities for Meridian Bank and HMN Financial
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Meridian and HMN is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Bank and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and Meridian 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 Meridian Bank 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 Meridian Bank i.e., Meridian Bank and HMN Financial go up and down completely randomly.
Pair Corralation between Meridian Bank and HMN Financial
Given the investment horizon of 90 days Meridian Bank is expected to generate 0.74 times more return on investment than HMN Financial. However, Meridian Bank is 1.36 times less risky than HMN Financial. It trades about 0.14 of its potential returns per unit of risk. HMN Financial is currently generating about 0.08 per unit of risk. If you would invest 943.00 in Meridian Bank on November 5, 2024 and sell it today you would earn a total of 729.00 from holding Meridian Bank or generate 77.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.7% |
| Values | Daily Returns |
Meridian Bank vs. HMN Financial
Performance |
| Timeline |
| Meridian Bank |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Meridian Bank and HMN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Bank and HMN Financial
The main advantage of trading using opposite Meridian Bank and HMN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Bank 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.| Meridian Bank vs. Community West Bancshares | Meridian Bank vs. Investar Holding Corp | Meridian Bank vs. Finward Bancorp | Meridian Bank vs. First Financial Northwest |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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