Correlation Between Business First and HMN Financial
Can any of the company-specific risk be diversified away by investing in both Business First 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 Business First and HMN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Business First Bancshares and HMN Financial, you can compare the effects of market volatilities on Business First 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 Business First with a short position of HMN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Business First and HMN Financial.
Diversification Opportunities for Business First and HMN Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Business and HMN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Business First Bancshares and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and Business First 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 Business First Bancshares 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 Business First i.e., Business First and HMN Financial go up and down completely randomly.
Pair Corralation between Business First and HMN Financial
If you would invest (100.00) in HMN Financial on December 1, 2024 and sell it today you would earn a total of 100.00 from holding HMN Financial or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Business First Bancshares vs. HMN Financial
Performance |
Timeline |
Business First Bancshares |
HMN Financial |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Business First and HMN Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Business First and HMN Financial
The main advantage of trading using opposite Business First and HMN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Business First 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.Business First vs. First Community | Business First vs. Community West Bancshares | Business First vs. First Financial Northwest | Business First vs. First Northwest Bancorp |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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