Correlation Between HomeTrust Bancshares and Enterprise Financial

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

By analyzing existing cross correlation between HomeTrust Bancshares and Enterprise Financial Services, you can compare the effects of market volatilities on HomeTrust Bancshares and Enterprise Financial 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 Enterprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeTrust Bancshares and Enterprise Financial.

Diversification Opportunities for HomeTrust Bancshares and Enterprise Financial

0.89

Correlation Coefficient

HomeTrust Bancshares  Enterprise Financial

Very poor diversification

The 3 months correlation between HomeTrust and Enterprise is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and Enterprise Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise Financial 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 Enterprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Financial has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and Enterprise Financial go up and down completely randomly.

Pair Corralation between HomeTrust Bancshares and Enterprise Financial

Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 2.17 times less return on investment than Enterprise Financial. But when comparing it to its historical volatility, HomeTrust Bancshares is 1.05 times less risky than Enterprise Financial. It trades about 0.06 of its potential returns per unit of risk. Enterprise Financial Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,117  in Enterprise Financial Services on September 13, 2024 and sell it today you would earn a total of  919.00  from holding Enterprise Financial Services or generate 17.96% return on investment over 90 days.

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

HomeTrust Bancshares  vs.  Enterprise Financial Services

HomeTrust Bancshares

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HomeTrust Bancshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, HomeTrust Bancshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Enterprise Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enterprise Financial Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Enterprise Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HomeTrust Bancshares and Enterprise Financial

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

The idea behind HomeTrust Bancshares and Enterprise Financial Services 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.