Correlation Between Tectonic Financial and Huntington Bancshares

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

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

Diversification Opportunities for Tectonic Financial and Huntington Bancshares

0.38

Correlation Coefficient

Tectonic Financial  Huntington Bancshares

Weak diversification

The 3 months correlation between Tectonic and Huntington is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares and Tectonic 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 Tectonic Financial PR are associated (or correlated) with Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Huntington Bancshares go up and down completely randomly.

Pair Corralation between Tectonic Financial and Huntington Bancshares

Assuming the 90 days horizon Tectonic Financial is expected to generate 1.16 times less return on investment than Huntington Bancshares. But when comparing it to its historical volatility, Tectonic Financial PR is 1.37 times less risky than Huntington Bancshares. It trades about 0.06 of its potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,757  in Huntington Bancshares Incorporated on December 23, 2024 and sell it today you would earn a total of  62.00  from holding Huntington Bancshares Incorporated or generate 3.53% return on investment over 90 days.

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

Tectonic Financial PR  vs.  Huntington Bancshares Incorpor

Tectonic Financial

Risk-Adjusted Performance

Modest

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

Huntington Bancshares

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Bancshares Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Huntington Bancshares is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tectonic Financial and Huntington Bancshares

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

The idea behind Tectonic Financial PR and Huntington Bancshares Incorporated 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.