Correlation Between HomeTrust Bancshares and Ames National

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

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

Diversification Opportunities for HomeTrust Bancshares and Ames National

0.28

Correlation Coefficient

HomeTrust Bancshares  Ames National

Modest diversification

The 3 months correlation between HomeTrust and Ames is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and Ames National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ames National and HomeTrust Bancshares 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 HomeTrust Bancshares are associated (or correlated) with Ames National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ames National has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and Ames National go up and down completely randomly.

Pair Corralation between HomeTrust Bancshares and Ames National

Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 1.09 times more return on investment than Ames National. However, HomeTrust Bancshares is 1.09 times more volatile than Ames National. It trades about 0.02 of its potential returns per unit of risk. Ames National is currently generating about -0.07 per unit of risk. If you would invest  3,389  in HomeTrust Bancshares on September 26, 2024 and sell it today you would earn a total of  24.00  from holding HomeTrust Bancshares or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

HomeTrust Bancshares  vs.  Ames National

HomeTrust Bancshares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeTrust Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Ames National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ames National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with HomeTrust Bancshares and Ames National

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

The idea behind HomeTrust Bancshares and Ames National 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.