Correlation Between Joby Aviation and HomeTrust Bancshares

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

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

Diversification Opportunities for Joby Aviation and HomeTrust Bancshares

0.7

Correlation Coefficient

Joby Aviation  HomeTrust Bancshares

Poor diversification

The 3 months correlation between Joby and HomeTrust is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Joby Aviation and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and Joby Aviation 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 Joby Aviation are associated (or correlated) with HomeTrust Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeTrust Bancshares has no effect on the direction of Joby Aviation i.e., Joby Aviation and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Joby Aviation and HomeTrust Bancshares

Given the investment horizon of 90 days Joby Aviation is expected to under-perform the HomeTrust Bancshares. In addition to that, Joby Aviation is 1.21 times more volatile than HomeTrust Bancshares. It trades about -0.13 of its total potential returns per unit of risk. HomeTrust Bancshares is currently generating about -0.06 per unit of volatility. If you would invest  2,602  in HomeTrust Bancshares on January 25, 2024 and sell it today you would lose (78.00) from holding HomeTrust Bancshares or give up 3.0% of portfolio value over 90 days.

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

Joby Aviation  vs.  HomeTrust Bancshares

Joby Aviation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joby Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

HomeTrust Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeTrust Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Joby Aviation and HomeTrust Bancshares

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

The idea behind Joby Aviation and HomeTrust Bancshares 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.