Correlation Between HomeTrust Bancshares and German American
Can any of the company-specific risk be diversified away by investing in both HomeTrust Bancshares and German American 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 German American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeTrust Bancshares and German American Bancorp, you can compare the effects of market volatilities on HomeTrust Bancshares and German American 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 German American. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeTrust Bancshares and German American.
Diversification Opportunities for HomeTrust Bancshares and German American
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HomeTrust and German is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and German American Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on German American Bancorp 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 German American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of German American Bancorp has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and German American go up and down completely randomly.
Pair Corralation between HomeTrust Bancshares and German American
Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 1.17 times more return on investment than German American. However, HomeTrust Bancshares is 1.17 times more volatile than German American Bancorp. It trades about 0.21 of its potential returns per unit of risk. German American Bancorp is currently generating about 0.08 per unit of risk. If you would invest 2,596 in HomeTrust Bancshares on March 2, 2024 and sell it today you would earn a total of 160.00 from holding HomeTrust Bancshares or generate 6.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
HomeTrust Bancshares vs. German American Bancorp
Performance |
Timeline |
HomeTrust Bancshares |
German American Bancorp |
HomeTrust Bancshares and German American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HomeTrust Bancshares and German American
The main advantage of trading using opposite HomeTrust Bancshares and German American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeTrust Bancshares position performs unexpectedly, German American 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 German American will offset losses from the drop in German American's long position.HomeTrust Bancshares vs. Home Bancorp | HomeTrust Bancshares vs. Home Federal Bancorp | HomeTrust Bancshares vs. Franklin Financial Services | HomeTrust Bancshares vs. HMN Financial |
German American vs. Home Bancorp | German American vs. Home Federal Bancorp | German American vs. Franklin Financial Services | German American vs. HMN Financial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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