Correlation Between HV Bancorp and 1st Source

Can any of the company-specific risk be diversified away by investing in both HV Bancorp and 1st Source 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 HV Bancorp and 1st Source into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HV Bancorp and 1st Source, you can compare the effects of market volatilities on HV Bancorp and 1st Source 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 HV Bancorp with a short position of 1st Source. Check out your portfolio center. Please also check ongoing floating volatility patterns of HV Bancorp and 1st Source.

Diversification Opportunities for HV Bancorp and 1st Source

-0.06

Correlation Coefficient

HV Bancorp  1st Source

Good diversification

The 3 months correlation between HVBC and 1st is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding HV Bancorp and 1st Source in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Source and HV Bancorp 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 HV Bancorp are associated (or correlated) with 1st Source. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Source has no effect on the direction of HV Bancorp i.e., HV Bancorp and 1st Source go up and down completely randomly.

Pair Corralation between HV Bancorp and 1st Source

If you would invest  3,460  in HV Bancorp on September 20, 2024 and sell it today you would earn a total of  0.00  from holding HV Bancorp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

HV Bancorp  vs.  1st Source

HV Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HV Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, HV Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

1st Source

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days 1st Source has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, 1st Source is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HV Bancorp and 1st Source

The main advantage of trading using opposite HV Bancorp and 1st Source positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HV Bancorp position performs unexpectedly, 1st Source 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 1st Source will offset losses from the drop in 1st Source's long position.

The idea behind HV Bancorp and 1st Source 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.