Correlation Between Teb Bancorp and HMN Financial

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

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

Diversification Opportunities for Teb Bancorp and HMN Financial

0.0

Correlation Coefficient

Teb Bancorp  HMN Financial

Pay attention - limited upside

The 3 months correlation between Teb and HMN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Teb Bancorp and HMN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMN Financial and Teb 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 Teb Bancorp are associated (or correlated) with HMN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMN Financial has no effect on the direction of Teb Bancorp i.e., Teb Bancorp and HMN Financial go up and down completely randomly.

Pair Corralation between Teb Bancorp and HMN Financial

If you would invest  665.00  in Teb Bancorp on October 14, 2024 and sell it today you would earn a total of  130.00  from holding Teb Bancorp or generate 19.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Teb Bancorp  vs.  HMN Financial

Teb Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teb Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, Teb Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

HMN Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HMN Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HMN Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Teb Bancorp and HMN Financial

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

The idea behind Teb Bancorp and HMN Financial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.