Correlation Between LINKBANCORP and HomeTrust Bancshares

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

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

Diversification Opportunities for LINKBANCORP and HomeTrust Bancshares

0.77

Correlation Coefficient

LINKBANCORP  HomeTrust Bancshares

Poor diversification

The 3 months correlation between LINKBANCORP and HomeTrust is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding LINKBANCORP and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and LINKBANCORP 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 LINKBANCORP 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 LINKBANCORP i.e., LINKBANCORP and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between LINKBANCORP and HomeTrust Bancshares

Given the investment horizon of 90 days LINKBANCORP is expected to generate 0.88 times more return on investment than HomeTrust Bancshares. However, LINKBANCORP is 1.13 times less risky than HomeTrust Bancshares. It trades about 0.13 of its potential returns per unit of risk. HomeTrust Bancshares is currently generating about 0.0 per unit of risk. If you would invest  643.00  in LINKBANCORP on September 22, 2024 and sell it today you would earn a total of  108.00  from holding LINKBANCORP or generate 16.8% return on investment over 90 days.

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

LINKBANCORP  vs.  HomeTrust Bancshares

LINKBANCORP

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

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 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.

Pair Trading with LINKBANCORP and HomeTrust Bancshares

The main advantage of trading using opposite LINKBANCORP and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LINKBANCORP 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 LINKBANCORP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.