Correlation Between HomeTrust Bancshares and Orrstown Financial
Can any of the company-specific risk be diversified away by investing in both HomeTrust Bancshares and Orrstown 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 HomeTrust Bancshares and Orrstown Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeTrust Bancshares and Orrstown Financial Services, you can compare the effects of market volatilities on HomeTrust Bancshares and Orrstown 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 HomeTrust Bancshares with a short position of Orrstown Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeTrust Bancshares and Orrstown Financial.
Diversification Opportunities for HomeTrust Bancshares and Orrstown Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HomeTrust and Orrstown is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and Orrstown Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orrstown Financial 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 Orrstown Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orrstown Financial has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and Orrstown Financial go up and down completely randomly.
Pair Corralation between HomeTrust Bancshares and Orrstown Financial
Given the investment horizon of 90 days HomeTrust Bancshares is expected to under-perform the Orrstown Financial. In addition to that, HomeTrust Bancshares is 1.24 times more volatile than Orrstown Financial Services. It trades about -0.35 of its total potential returns per unit of risk. Orrstown Financial Services is currently generating about -0.34 per unit of volatility. If you would invest 4,010 in Orrstown Financial Services on September 26, 2024 and sell it today you would lose (340.00) from holding Orrstown Financial Services or give up 8.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
HomeTrust Bancshares vs. Orrstown Financial Services
Performance |
Timeline |
HomeTrust Bancshares |
Orrstown Financial |
HomeTrust Bancshares and Orrstown Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HomeTrust Bancshares and Orrstown Financial
The main advantage of trading using opposite HomeTrust Bancshares and Orrstown Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeTrust Bancshares position performs unexpectedly, Orrstown 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 Orrstown Financial will offset losses from the drop in Orrstown Financial'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 |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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