Correlation Between HomeTrust Bancshares and First Bancorp

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

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

Diversification Opportunities for HomeTrust Bancshares and First Bancorp

0.57

Correlation Coefficient

HomeTrust Bancshares  First Bancorp

Very weak diversification

The 3 months correlation between HomeTrust and First is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and First Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Bancorp 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 First Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Bancorp has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and First Bancorp go up and down completely randomly.

Pair Corralation between HomeTrust Bancshares and First Bancorp

Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 1.11 times less return on investment than First Bancorp. In addition to that, HomeTrust Bancshares is 1.06 times more volatile than First Bancorp. It trades about 0.05 of its total potential returns per unit of risk. First Bancorp is currently generating about 0.06 per unit of volatility. If you would invest  1,181  in First Bancorp on September 26, 2024 and sell it today you would earn a total of  699.00  from holding First Bancorp or generate 59.19% return on investment over 90 days.

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

HomeTrust Bancshares  vs.  First Bancorp

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.

First Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with HomeTrust Bancshares and First Bancorp

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

The idea behind HomeTrust Bancshares and First Bancorp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..