Correlation Between 1st Source and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both 1st Source 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 1st Source and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Source and Heritage Financial, you can compare the effects of market volatilities on 1st Source 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 1st Source with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Source and Heritage Financial.
Diversification Opportunities for 1st Source and Heritage Financial
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 1st and Heritage is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding 1st Source and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial and 1st Source 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 1st Source 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 1st Source i.e., 1st Source and Heritage Financial go up and down completely randomly.
Pair Corralation between 1st Source and Heritage Financial
Given the investment horizon of 90 days 1st Source is expected to generate 0.84 times more return on investment than Heritage Financial. However, 1st Source is 1.19 times less risky than Heritage Financial. It trades about 0.04 of its potential returns per unit of risk. Heritage Financial is currently generating about 0.01 per unit of risk. If you would invest 4,920 in 1st Source on August 31, 2024 and sell it today you would earn a total of 1,569 from holding 1st Source or generate 31.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
1st Source vs. Heritage Financial
Performance |
| Timeline |
| 1st Source |
| Heritage Financial |
1st Source and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Source and Heritage Financial
The main advantage of trading using opposite 1st Source and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Source 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.| 1st Source vs. Penns Woods Bancorp | 1st Source vs. Great Southern Bancorp | 1st Source vs. Waterstone Financial | 1st Source vs. Chemung Financial Corp |
| 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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