Correlation Between Heartland Financial and Old National

Can any of the company-specific risk be diversified away by investing in both Heartland Financial and Old National 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 Heartland Financial and Old National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heartland Financial USA and Old National Bancorp, you can compare the effects of market volatilities on Heartland Financial and Old National 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 Heartland Financial with a short position of Old National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and Old National.

Diversification Opportunities for Heartland Financial and Old National

0.39

Correlation Coefficient

Heartland Financial  Old National

Weak diversification

The 3 months correlation between Heartland and Old is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and Old National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old National Bancorp and Heartland Financial 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 Heartland Financial USA are associated (or correlated) with Old National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old National Bancorp has no effect on the direction of Heartland Financial i.e., Heartland Financial and Old National go up and down completely randomly.

Pair Corralation between Heartland Financial and Old National

Assuming the 90 days horizon Heartland Financial is expected to generate 1.38 times less return on investment than Old National. But when comparing it to its historical volatility, Heartland Financial USA is 1.85 times less risky than Old National. It trades about 0.1 of its potential returns per unit of risk. Old National Bancorp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,477  in Old National Bancorp on September 3, 2024 and sell it today you would earn a total of  83.00  from holding Old National Bancorp or generate 3.35% return on investment over 90 days.

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

Heartland Financial USA  vs.  Old National Bancorp

Heartland Financial USA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Financial USA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Heartland Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Old National Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Old National Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Old National is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Heartland Financial and Old National

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

The idea behind Heartland Financial USA and Old National 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.