Correlation Between Affinity Bancshares and HomeTrust Bancshares

Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and HomeTrust 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 Affinity Bancshares and HomeTrust Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Affinity Bancshares and HomeTrust Bancshares, you can compare the effects of market volatilities on Affinity Bancshares and HomeTrust 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 Affinity Bancshares with a short position of HomeTrust Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and HomeTrust Bancshares.

Diversification Opportunities for Affinity Bancshares and HomeTrust Bancshares

0.39

Correlation Coefficient

Affinity Bancshares  HomeTrust Bancshares

Weak diversification

The 3 months correlation between Affinity and HomeTrust is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and Affinity Bancshares 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 Affinity Bancshares are associated (or correlated) with HomeTrust Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeTrust Bancshares has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Affinity Bancshares and HomeTrust Bancshares

Given the investment horizon of 90 days Affinity Bancshares is expected to under-perform the HomeTrust Bancshares. In addition to that, Affinity Bancshares is 2.93 times more volatile than HomeTrust Bancshares. It trades about -0.22 of its total potential returns per unit of risk. HomeTrust Bancshares is currently generating about -0.5 per unit of volatility. If you would invest  3,711  in HomeTrust Bancshares on October 13, 2024 and sell it today you would lose (551.00) from holding HomeTrust Bancshares or give up 14.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Affinity Bancshares  vs.  HomeTrust Bancshares

Affinity Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affinity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

HomeTrust Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeTrust Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Affinity Bancshares and HomeTrust Bancshares

The main advantage of trading using opposite Affinity Bancshares and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, HomeTrust 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 HomeTrust Bancshares will offset losses from the drop in HomeTrust Bancshares' long position.

The idea behind Affinity Bancshares and HomeTrust Bancshares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.