Correlation Between Nedbank and HomeTrust Bancshares

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Can any of the company-specific risk be diversified away by investing in both Nedbank 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 Nedbank and HomeTrust Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nedbank Group and HomeTrust Bancshares, you can compare the effects of market volatilities on Nedbank 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 Nedbank with a short position of HomeTrust Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nedbank and HomeTrust Bancshares.

Diversification Opportunities for Nedbank and HomeTrust Bancshares

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nedbank and HomeTrust is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nedbank Group and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and Nedbank 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 Nedbank Group 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 Nedbank i.e., Nedbank and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Nedbank and HomeTrust Bancshares

Assuming the 90 days horizon Nedbank Group is expected to generate 1.04 times more return on investment than HomeTrust Bancshares. However, Nedbank is 1.04 times more volatile than HomeTrust Bancshares. It trades about 0.1 of its potential returns per unit of risk. HomeTrust Bancshares is currently generating about 0.04 per unit of risk. If you would invest  1,145  in Nedbank Group on December 29, 2023 and sell it today you would earn a total of  45.00  from holding Nedbank Group or generate 3.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Nedbank Group  vs.  HomeTrust Bancshares

 Performance 
       Timeline  
Nedbank Group 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Nedbank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Nedbank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
HomeTrust Bancshares 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days HomeTrust Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Nedbank and HomeTrust Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nedbank and HomeTrust Bancshares

The main advantage of trading using opposite Nedbank and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nedbank 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 Nedbank Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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