Correlation Between Bank of Hawaii and Central Pacific
Can any of the company-specific risk be diversified away by investing in both Bank of Hawaii and Central Pacific 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 Bank of Hawaii and Central Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Hawaii and Central Pacific Financial, you can compare the effects of market volatilities on Bank of Hawaii and Central Pacific 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 Bank of Hawaii with a short position of Central Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Hawaii and Central Pacific.
Diversification Opportunities for Bank of Hawaii and Central Pacific
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Central is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Hawaii and Central Pacific Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Pacific Financial and Bank of Hawaii 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 Bank of Hawaii are associated (or correlated) with Central Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Pacific Financial has no effect on the direction of Bank of Hawaii i.e., Bank of Hawaii and Central Pacific go up and down completely randomly.
Pair Corralation between Bank of Hawaii and Central Pacific
Assuming the 90 days trading horizon Bank of Hawaii is expected to under-perform the Central Pacific. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bank of Hawaii is 1.43 times less risky than Central Pacific. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Central Pacific Financial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,766 in Central Pacific Financial on November 6, 2024 and sell it today you would earn a total of 223.00 from holding Central Pacific Financial or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Hawaii vs. Central Pacific Financial
Performance |
| Timeline |
| Bank of Hawaii |
| Central Pacific Financial |
Bank of Hawaii and Central Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Hawaii and Central Pacific
The main advantage of trading using opposite Bank of Hawaii and Central Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Hawaii position performs unexpectedly, Central Pacific 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 Central Pacific will offset losses from the drop in Central Pacific's long position.| Bank of Hawaii vs. CullenFrost Bankers | Bank of Hawaii vs. Citizens Financial Group | Bank of Hawaii vs. Cadence Bank | Bank of Hawaii vs. Truist Financial |
| Central Pacific vs. Bank of Hawaii | Central Pacific vs. Territorial Bancorp | Central Pacific vs. First Bancorp | Central Pacific vs. Hancock Whitney Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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