Correlation Between Main Street and HMN Financial
Can any of the company-specific risk be diversified away by investing in both Main Street 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 Main Street and HMN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Financial and HMN Financial, you can compare the effects of market volatilities on Main Street 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 Main Street with a short position of HMN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and HMN Financial.
Diversification Opportunities for Main Street and HMN Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Main and HMN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Financial and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and Main Street 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 Main Street 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 Main Street i.e., Main Street and HMN Financial go up and down completely randomly.
Pair Corralation between Main Street and HMN Financial
Given the investment horizon of 90 days Main Street Financial is expected to under-perform the HMN Financial. In addition to that, Main Street is 1.13 times more volatile than HMN Financial. It trades about 0.0 of its total potential returns per unit of risk. HMN Financial is currently generating about 0.04 per unit of volatility. If you would invest 2,141 in HMN Financial on November 5, 2024 and sell it today you would earn a total of 658.00 from holding HMN Financial or generate 30.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 83.77% |
| Values | Daily Returns |
Main Street Financial vs. HMN Financial
Performance |
| Timeline |
| Main Street Financial |
| HMN Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Main Street and HMN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and HMN Financial
The main advantage of trading using opposite Main Street and HMN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street 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.| Main Street vs. CCFNB Bancorp | Main Street vs. Burke Herbert Financial | Main Street vs. First IC | Main Street vs. Enterprise Financial Services |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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