Correlation Between HomeTrust Bancshares and Red River

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Can any of the company-specific risk be diversified away by investing in both HomeTrust Bancshares and Red River 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 Red River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeTrust Bancshares and Red River Bancshares, you can compare the effects of market volatilities on HomeTrust Bancshares and Red River 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 Red River. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeTrust Bancshares and Red River.

Diversification Opportunities for HomeTrust Bancshares and Red River

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between HomeTrust and Red is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and Red River Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red River Bancshares 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 Red River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red River Bancshares has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and Red River go up and down completely randomly.

Pair Corralation between HomeTrust Bancshares and Red River

Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 1.16 times more return on investment than Red River. However, HomeTrust Bancshares is 1.16 times more volatile than Red River Bancshares. It trades about 0.05 of its potential returns per unit of risk. Red River Bancshares is currently generating about 0.02 per unit of risk. If you would invest  2,294  in HomeTrust Bancshares on September 26, 2024 and sell it today you would earn a total of  1,119  from holding HomeTrust Bancshares or generate 48.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

HomeTrust Bancshares  vs.  Red River Bancshares

 Performance 
       Timeline  
HomeTrust Bancshares 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
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.
Red River Bancshares 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Red River Bancshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Red River may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HomeTrust Bancshares and Red River Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HomeTrust Bancshares and Red River

The main advantage of trading using opposite HomeTrust Bancshares and Red River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeTrust Bancshares position performs unexpectedly, Red River 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 Red River will offset losses from the drop in Red River's long position.
The idea behind HomeTrust Bancshares and Red River Bancshares 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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