Correlation Between Greene County and HV Bancorp

Can any of the company-specific risk be diversified away by investing in both Greene County and HV Bancorp 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 Greene County and HV Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Greene County and HV Bancorp

-0.18

Correlation Coefficient

Greene County  HV Bancorp

Good diversification

The 3 months correlation between Greene and HVBC is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Greene County Bancorp and HV Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HV Bancorp and Greene County 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 Greene County Bancorp are associated (or correlated) with HV Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HV Bancorp has no effect on the direction of Greene County i.e., Greene County and HV Bancorp go up and down completely randomly.

Pair Corralation between Greene County and HV Bancorp

Given the investment horizon of 90 days Greene County is expected to generate 7.13 times less return on investment than HV Bancorp. In addition to that, Greene County is 1.59 times more volatile than HV Bancorp. It trades about 0.01 of its total potential returns per unit of risk. HV Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  2,713  in HV Bancorp on September 5, 2024 and sell it today you would earn a total of  747.00  from holding HV Bancorp or generate 27.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.66%
Values	Daily Returns

Greene County Bancorp  vs.  HV Bancorp

Greene County Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greene County Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Greene County is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HV Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HV Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, HV Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Greene County and HV Bancorp

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

The idea behind Greene County Bancorp and HV Bancorp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.