Correlation Between Heartland Banccorp and QNB Corp

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

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

Diversification Opportunities for Heartland Banccorp and QNB Corp

0.15

Correlation Coefficient

Heartland Banccorp  QNB Corp

Average diversification

The 3 months correlation between Heartland and QNB is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Banccorp and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Corp and Heartland Banccorp 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 Heartland Banccorp are associated (or correlated) with QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Heartland Banccorp i.e., Heartland Banccorp and QNB Corp go up and down completely randomly.

Pair Corralation between Heartland Banccorp and QNB Corp

Given the investment horizon of 90 days Heartland Banccorp is expected to generate 1.91 times more return on investment than QNB Corp. However, Heartland Banccorp is 1.91 times more volatile than QNB Corp. It trades about 0.12 of its potential returns per unit of risk. QNB Corp is currently generating about 0.14 per unit of risk. If you would invest  15,250  in Heartland Banccorp on December 19, 2024 and sell it today you would earn a total of  750.00  from holding Heartland Banccorp or generate 4.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	50.85%
Values	Daily Returns

Heartland Banccorp  vs.  QNB Corp

Heartland Banccorp

Risk-Adjusted Performance

OK

Over the last 90 days Heartland Banccorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, Heartland Banccorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

QNB Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QNB Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, QNB Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Heartland Banccorp and QNB Corp

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

The idea behind Heartland Banccorp and QNB Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.