Correlation Between HMN Financial and Keweenaw Financial

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

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

Diversification Opportunities for HMN Financial and Keweenaw Financial

0.0

Correlation Coefficient

HMN Financial  Keweenaw Financial

Pay attention - limited upside

The 3 months correlation between HMN and Keweenaw is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HMN Financial and Keweenaw Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keweenaw Financial 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 Keweenaw Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keweenaw Financial has no effect on the direction of HMN Financial i.e., HMN Financial and Keweenaw Financial go up and down completely randomly.

Pair Corralation between HMN Financial and Keweenaw Financial

If you would invest  2,105  in HMN Financial on October 4, 2024 and sell it today you would earn a total of  694.00  from holding HMN Financial or generate 32.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

HMN Financial  vs.  Keweenaw Financial

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.

Keweenaw Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keweenaw Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Keweenaw Financial is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with HMN Financial and Keweenaw Financial

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

The idea behind HMN Financial and Keweenaw Financial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.