Correlation Between Luther Burbank and HomeTrust Bancshares

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

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

Diversification Opportunities for Luther Burbank and HomeTrust Bancshares

0.0

Correlation Coefficient

Luther Burbank  HomeTrust Bancshares

Pay attention - limited upside

The 3 months correlation between Luther and HomeTrust is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Luther Burbank and HomeTrust Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeTrust Bancshares and Luther Burbank 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 Luther Burbank 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 Luther Burbank i.e., Luther Burbank and HomeTrust Bancshares go up and down completely randomly.

Pair Corralation between Luther Burbank and HomeTrust Bancshares

If you would invest  2,548  in HomeTrust Bancshares on February 3, 2024 and sell it today you would earn a total of  116.00  from holding HomeTrust Bancshares or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.35%
Values	Daily Returns

Luther Burbank  vs.  HomeTrust Bancshares

Luther Burbank

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Luther Burbank and HomeTrust Bancshares

The main advantage of trading using opposite Luther Burbank and HomeTrust Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luther Burbank 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 Luther Burbank 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.