Correlation Between Bankwell Financial and HomeTrust Bancshares
Can any of the company-specific risk be diversified away by investing in both Bankwell Financial 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 Bankwell Financial and HomeTrust Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankwell Financial Group and HomeTrust Bancshares, you can compare the effects of market volatilities on Bankwell Financial 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 Bankwell Financial with a short position of HomeTrust Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankwell Financial and HomeTrust Bancshares.
Diversification Opportunities for Bankwell Financial and HomeTrust Bancshares
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bankwell and HomeTrust is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bankwell Financial Group and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and Bankwell Financial 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 Bankwell Financial Group 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 Bankwell Financial i.e., Bankwell Financial and HomeTrust Bancshares go up and down completely randomly.
Pair Corralation between Bankwell Financial and HomeTrust Bancshares
Given the investment horizon of 90 days Bankwell Financial Group is expected to generate 1.04 times more return on investment than HomeTrust Bancshares. However, Bankwell Financial is 1.04 times more volatile than HomeTrust Bancshares. It trades about 0.1 of its potential returns per unit of risk. HomeTrust Bancshares is currently generating about 0.06 per unit of risk. If you would invest 2,892 in Bankwell Financial Group on September 8, 2024 and sell it today you would earn a total of 408.00 from holding Bankwell Financial Group or generate 14.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bankwell Financial Group vs. HomeTrust Bancshares
Performance |
Timeline |
Bankwell Financial |
HomeTrust Bancshares |
Bankwell Financial and HomeTrust Bancshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bankwell Financial and HomeTrust Bancshares
The main advantage of trading using opposite Bankwell Financial and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankwell Financial 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.Bankwell Financial vs. German American Bancorp | Bankwell Financial vs. Texas Capital Bancshares | Bankwell Financial vs. Northfield Bancorp | Bankwell Financial vs. First Northwest Bancorp |
HomeTrust Bancshares vs. German American Bancorp | HomeTrust Bancshares vs. Texas Capital Bancshares | HomeTrust Bancshares vs. Northfield Bancorp | HomeTrust Bancshares 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
CEOs Directory Screen CEOs from public companies around the world | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |