Correlation Between Bank of Hawaii and Community West
Can any of the company-specific risk be diversified away by investing in both Bank of Hawaii and Community West 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 Community West 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 Community West Bancshares, you can compare the effects of market volatilities on Bank of Hawaii and Community West 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 Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Hawaii and Community West.
Diversification Opportunities for Bank of Hawaii and Community West
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Community is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Hawaii and Community West Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community West Bancshares 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 Community West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community West Bancshares has no effect on the direction of Bank of Hawaii i.e., Bank of Hawaii and Community West go up and down completely randomly.
Pair Corralation between Bank of Hawaii and Community West
Considering the 90-day investment horizon Bank of Hawaii is expected to generate 1.72 times more return on investment than Community West. However, Bank of Hawaii is 1.72 times more volatile than Community West Bancshares. It trades about 0.32 of its potential returns per unit of risk. Community West Bancshares is currently generating about 0.43 per unit of risk. If you would invest 6,539 in Bank of Hawaii on August 26, 2024 and sell it today you would earn a total of 1,489 from holding Bank of Hawaii or generate 22.77% 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. Community West Bancshares
Performance |
| Timeline |
| Bank of Hawaii |
| Community West Bancshares |
Bank of Hawaii and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Hawaii and Community West
The main advantage of trading using opposite Bank of Hawaii and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Hawaii position performs unexpectedly, Community West 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 Community West will offset losses from the drop in Community West's long position.| Bank of Hawaii vs. Central Pacific Financial | Bank of Hawaii vs. Territorial Bancorp | Bank of Hawaii vs. First Bancorp | Bank of Hawaii vs. Hancock Whitney Corp |
| Community West vs. Home Federal Bancorp | Community West vs. Magyar Bancorp | Community West vs. First Northwest Bancorp | Community West vs. First Financial Northwest |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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