Correlation Between NYSE Composite and Hawthorn Bancshares
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Hawthorn Bancshares 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 NYSE Composite and Hawthorn Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Hawthorn Bancshares, you can compare the effects of market volatilities on NYSE Composite and Hawthorn Bancshares 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 NYSE Composite with a short position of Hawthorn Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Hawthorn Bancshares.
Diversification Opportunities for NYSE Composite and Hawthorn Bancshares
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Hawthorn is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Hawthorn Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawthorn Bancshares and NYSE Composite 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 NYSE Composite are associated (or correlated) with Hawthorn Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawthorn Bancshares has no effect on the direction of NYSE Composite i.e., NYSE Composite and Hawthorn Bancshares go up and down completely randomly.
Pair Corralation between NYSE Composite and Hawthorn Bancshares
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.94 times less return on investment than Hawthorn Bancshares. But when comparing it to its historical volatility, NYSE Composite is 2.72 times less risky than Hawthorn Bancshares. It trades about 0.08 of its potential returns per unit of risk. Hawthorn Bancshares is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,062 in Hawthorn Bancshares on September 2, 2024 and sell it today you would earn a total of 1,178 from holding Hawthorn Bancshares or generate 57.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Hawthorn Bancshares
Performance |
| Timeline |
NYSE Composite and Hawthorn Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Hawthorn Bancshares
Pair trading matchups for Hawthorn Bancshares
Pair Trading with NYSE Composite and Hawthorn Bancshares
The main advantage of trading using opposite NYSE Composite and Hawthorn Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Hawthorn Bancshares 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 Hawthorn Bancshares will offset losses from the drop in Hawthorn Bancshares' long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| Hawthorn Bancshares vs. Affinity Bancshares | Hawthorn Bancshares vs. Auburn National Bancorporation | Hawthorn Bancshares vs. First Community | Hawthorn Bancshares vs. LINKBANCORP |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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