Correlation Between HomeTrust Bancshares and First Commonwealth
Can any of the company-specific risk be diversified away by investing in both HomeTrust Bancshares and First Commonwealth 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 Commonwealth 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 Commonwealth Financial, you can compare the effects of market volatilities on HomeTrust Bancshares and First Commonwealth 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 Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeTrust Bancshares and First Commonwealth.
Diversification Opportunities for HomeTrust Bancshares and First Commonwealth
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HomeTrust and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and First Commonwealth Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Commonwealth 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 Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Commonwealth has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and First Commonwealth go up and down completely randomly.
Pair Corralation between HomeTrust Bancshares and First Commonwealth
Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 1.26 times less return on investment than First Commonwealth. But when comparing it to its historical volatility, HomeTrust Bancshares is 1.02 times less risky than First Commonwealth. It trades about 0.12 of its potential returns per unit of risk. First Commonwealth Financial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,270 in First Commonwealth Financial on September 6, 2024 and sell it today you would earn a total of 616.00 from holding First Commonwealth Financial or generate 48.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
HomeTrust Bancshares vs. First Commonwealth Financial
Performance |
Timeline |
HomeTrust Bancshares |
First Commonwealth |
HomeTrust Bancshares and First Commonwealth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HomeTrust Bancshares and First Commonwealth
The main advantage of trading using opposite HomeTrust Bancshares and First Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeTrust Bancshares position performs unexpectedly, First Commonwealth 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 Commonwealth will offset losses from the drop in First Commonwealth's long position.HomeTrust Bancshares vs. First Northwest Bancorp | HomeTrust Bancshares vs. Community West Bancshares | HomeTrust Bancshares vs. First Financial Northwest | HomeTrust Bancshares vs. Great Southern Bancorp |
First Commonwealth vs. Great Southern Bancorp | First Commonwealth vs. Heritage Financial | First Commonwealth vs. Finward Bancorp | First Commonwealth vs. QCR Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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