Correlation Between Citizens Community and HomeTrust Bancshares

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

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

Diversification Opportunities for Citizens Community and HomeTrust Bancshares

0.61

Correlation Coefficient

Citizens Community  HomeTrust Bancshares

Poor diversification

The 3 months correlation between Citizens and HomeTrust is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Community Bancorp and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and Citizens Community 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 Citizens Community Bancorp 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 Citizens Community i.e., Citizens Community and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Citizens Community and HomeTrust Bancshares

Given the investment horizon of 90 days Citizens Community is expected to generate 1.12 times less return on investment than HomeTrust Bancshares. But when comparing it to its historical volatility, Citizens Community Bancorp is 1.24 times less risky than HomeTrust Bancshares. It trades about 0.05 of its potential returns per unit of risk. HomeTrust Bancshares is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,294  in HomeTrust Bancshares on September 26, 2024 and sell it today you would earn a total of  1,119  from holding HomeTrust Bancshares or generate 48.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citizens Community Bancorp  vs.  HomeTrust Bancshares

Citizens Community

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Community Bancorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Citizens Community demonstrated solid returns over the last few months and may actually be approaching a breakup point.

HomeTrust Bancshares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeTrust Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Citizens Community and HomeTrust Bancshares

The main advantage of trading using opposite Citizens Community and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Community 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 Citizens Community Bancorp 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.