Correlation Between HomeTrust Bancshares and Northeast Community

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

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

Diversification Opportunities for HomeTrust Bancshares and Northeast Community

0.3

Correlation Coefficient

HomeTrust Bancshares  Northeast Community

Weak diversification

The 3 months correlation between HomeTrust and Northeast is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and Northeast Community Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Community 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 Northeast Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Community has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and Northeast Community go up and down completely randomly.

Pair Corralation between HomeTrust Bancshares and Northeast Community

Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 0.97 times more return on investment than Northeast Community. However, HomeTrust Bancshares is 1.03 times less risky than Northeast Community. It trades about -0.01 of its potential returns per unit of risk. Northeast Community Bancorp is currently generating about -0.2 per unit of risk. If you would invest  3,714  in HomeTrust Bancshares on December 2, 2024 and sell it today you would lose (59.00) from holding HomeTrust Bancshares or give up 1.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

HomeTrust Bancshares  vs.  Northeast Community Bancorp

HomeTrust Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days HomeTrust Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Northeast Community

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northeast Community Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HomeTrust Bancshares and Northeast Community

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

The idea behind HomeTrust Bancshares and Northeast Community 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.