Correlation Between HarborOne Bancorp and Equity Bancshares

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

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

Diversification Opportunities for HarborOne Bancorp and Equity Bancshares

0.21

Correlation Coefficient

HarborOne Bancorp  Equity Bancshares

Modest diversification

The 3 months correlation between HarborOne and Equity is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding HarborOne Bancorp and Equity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Bancshares and HarborOne Bancorp 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 HarborOne Bancorp are associated (or correlated) with Equity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Bancshares has no effect on the direction of HarborOne Bancorp i.e., HarborOne Bancorp and Equity Bancshares go up and down completely randomly.

Pair Corralation between HarborOne Bancorp and Equity Bancshares

Given the investment horizon of 90 days HarborOne Bancorp is expected to generate 1.21 times less return on investment than Equity Bancshares. In addition to that, HarborOne Bancorp is 1.17 times more volatile than Equity Bancshares. It trades about 0.06 of its total potential returns per unit of risk. Equity Bancshares is currently generating about 0.09 per unit of volatility. If you would invest  3,211  in Equity Bancshares on February 8, 2024 and sell it today you would earn a total of  201.00  from holding Equity Bancshares or generate 6.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

HarborOne Bancorp  vs.  Equity Bancshares

HarborOne Bancorp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HarborOne Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, HarborOne Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Equity Bancshares

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Bancshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Equity Bancshares is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with HarborOne Bancorp and Equity Bancshares

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

The idea behind HarborOne Bancorp and Equity 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.