Correlation Between HomeTrust Bancshares and Simmons First

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

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

Diversification Opportunities for HomeTrust Bancshares and Simmons First

0.81

Correlation Coefficient

HomeTrust Bancshares  Simmons First

Very poor diversification

The 3 months correlation between HomeTrust and Simmons is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding HomeTrust Bancshares and Simmons First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmons First National 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 Simmons First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmons First National has no effect on the direction of HomeTrust Bancshares i.e., HomeTrust Bancshares and Simmons First go up and down completely randomly.

Pair Corralation between HomeTrust Bancshares and Simmons First

Given the investment horizon of 90 days HomeTrust Bancshares is expected to generate 0.97 times more return on investment than Simmons First. However, HomeTrust Bancshares is 1.03 times less risky than Simmons First. It trades about 0.05 of its potential returns per unit of risk. Simmons First National is currently generating about 0.02 per unit of risk. If you would invest  2,294  in HomeTrust Bancshares on September 26, 2024 and sell it today you would earn a total of  1,119  from holding HomeTrust Bancshares or generate 48.78% 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.  Simmons First National

HomeTrust Bancshares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HomeTrust Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, HomeTrust Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Simmons First National

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simmons First National are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Simmons First may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HomeTrust Bancshares and Simmons First

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

The idea behind HomeTrust Bancshares and Simmons First National 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.