Correlation Between Primis Financial and HomeTrust Bancshares
Can any of the company-specific risk be diversified away by investing in both Primis 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 Primis 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 Primis Financial Corp and HomeTrust Bancshares, you can compare the effects of market volatilities on Primis 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 Primis Financial with a short position of HomeTrust Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primis Financial and HomeTrust Bancshares.
Diversification Opportunities for Primis Financial and HomeTrust Bancshares
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Primis and HomeTrust is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Primis Financial Corp and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and Primis 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 Primis Financial Corp 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 Primis Financial i.e., Primis Financial and HomeTrust Bancshares go up and down completely randomly.
Pair Corralation between Primis Financial and HomeTrust Bancshares
Given the investment horizon of 90 days Primis Financial Corp is expected to under-perform the HomeTrust Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, Primis Financial Corp is 1.21 times less risky than HomeTrust Bancshares. The stock trades about -0.08 of its potential returns per unit of risk. The HomeTrust Bancshares is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 3,764 in HomeTrust Bancshares on September 7, 2024 and sell it today you would lose (72.00) from holding HomeTrust Bancshares or give up 1.91% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Primis Financial Corp vs. HomeTrust Bancshares
Performance |
Timeline |
Primis Financial Corp |
HomeTrust Bancshares |
Primis Financial and HomeTrust Bancshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Primis Financial and HomeTrust Bancshares
The main advantage of trading using opposite Primis Financial and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primis 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.Primis Financial vs. German American Bancorp | Primis Financial vs. Texas Capital Bancshares | Primis Financial vs. Northfield Bancorp | Primis 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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