Correlation Between HMN Financial and Bank Utica

Can any of the company-specific risk be diversified away by investing in both HMN Financial and Bank Utica 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 HMN Financial and Bank Utica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HMN Financial and Bank Utica Ny, you can compare the effects of market volatilities on HMN Financial and Bank Utica 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 HMN Financial with a short position of Bank Utica. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Bank Utica.

Diversification Opportunities for HMN Financial and Bank Utica

0.56

Correlation Coefficient

HMN Financial  Bank Utica

Very weak diversification

The 3 months correlation between HMN and Bank is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Bank Utica Ny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Utica Ny and HMN 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 HMN Financial are associated (or correlated) with Bank Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Utica Ny has no effect on the direction of HMN Financial i.e., HMN Financial and Bank Utica go up and down completely randomly.

Pair Corralation between HMN Financial and Bank Utica

Given the investment horizon of 90 days HMN Financial is expected to generate 1.82 times less return on investment than Bank Utica. But when comparing it to its historical volatility, HMN Financial is 1.9 times less risky than Bank Utica. It trades about 0.04 of its potential returns per unit of risk. Bank Utica Ny is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  34,642  in Bank Utica Ny on October 4, 2024 and sell it today you would earn a total of  14,358  from holding Bank Utica Ny or generate 41.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.02%
Values	Daily Returns

HMN Financial  vs.  Bank Utica Ny

HMN Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMN Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Bank Utica Ny

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Utica Ny are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Bank Utica disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HMN Financial and Bank Utica

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

The idea behind HMN Financial and Bank Utica Ny 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.