Correlation Between Heartland Financial and Equillium

Can any of the company-specific risk be diversified away by investing in both Heartland Financial and Equillium 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 Equillium 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 Equillium, you can compare the effects of market volatilities on Heartland Financial and Equillium 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 Equillium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and Equillium.

Diversification Opportunities for Heartland Financial and Equillium

-0.16

Correlation Coefficient

Heartland Financial  Equillium

Good diversification

The 3 months correlation between Heartland and Equillium is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium 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 Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Heartland Financial i.e., Heartland Financial and Equillium go up and down completely randomly.

Pair Corralation between Heartland Financial and Equillium

Assuming the 90 days horizon Heartland Financial USA is expected to generate 0.11 times more return on investment than Equillium. However, Heartland Financial USA is 9.2 times less risky than Equillium. It trades about 0.07 of its potential returns per unit of risk. Equillium is currently generating about -0.15 per unit of risk. If you would invest  2,447  in Heartland Financial USA on January 31, 2024 and sell it today you would earn a total of  53.00  from holding Heartland Financial USA or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Heartland Financial USA  vs.  Equillium

Heartland Financial USA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Financial USA are ranked lower than 3 (%) 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.

Equillium

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heartland Financial and Equillium

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

The idea behind Heartland Financial USA and Equillium 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.