Correlation Between HMN Financial and Crazy Woman

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

By analyzing existing cross correlation between HMN Financial and Crazy Woman Creek, you can compare the effects of market volatilities on HMN Financial and Crazy Woman 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 Crazy Woman. Check out your portfolio center. Please also check ongoing floating volatility patterns of HMN Financial and Crazy Woman.

Diversification Opportunities for HMN Financial and Crazy Woman

-0.16

Correlation Coefficient

HMN Financial  Crazy Woman

Good diversification

The 3 months correlation between HMN and Crazy is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Crazy Woman Creek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crazy Woman Creek 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 Crazy Woman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crazy Woman Creek has no effect on the direction of HMN Financial i.e., HMN Financial and Crazy Woman go up and down completely randomly.

Pair Corralation between HMN Financial and Crazy Woman

If you would invest  2,350  in Crazy Woman Creek on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Crazy Woman Creek or generate 0.0% return on investment over 90 days.

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

HMN Financial  vs.  Crazy Woman Creek

HMN Financial

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days HMN Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, HMN Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Crazy Woman Creek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crazy Woman Creek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Crazy Woman is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HMN Financial and Crazy Woman

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

The idea behind HMN Financial and Crazy Woman Creek 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.