Correlation Between Bank of Hawaii and First Community
Can any of the company-specific risk be diversified away by investing in both Bank of Hawaii and First Community 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 First Community 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 First Community, you can compare the effects of market volatilities on Bank of Hawaii and First Community 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 First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Hawaii and First Community.
Diversification Opportunities for Bank of Hawaii and First Community
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Hawaii and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community 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 First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of Bank of Hawaii i.e., Bank of Hawaii and First Community go up and down completely randomly.
Pair Corralation between Bank of Hawaii and First Community
Considering the 90-day investment horizon Bank of Hawaii is expected to generate 1.01 times less return on investment than First Community. In addition to that, Bank of Hawaii is 1.44 times more volatile than First Community. It trades about 0.21 of its total potential returns per unit of risk. First Community is currently generating about 0.3 per unit of volatility. If you would invest 2,291 in First Community on August 29, 2024 and sell it today you would earn a total of 270.50 from holding First Community or generate 11.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Hawaii vs. First Community
Performance |
| Timeline |
| Bank of Hawaii |
| First Community |
Bank of Hawaii and First Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Hawaii and First Community
The main advantage of trading using opposite Bank of Hawaii and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Hawaii position performs unexpectedly, First Community 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 First Community will offset losses from the drop in First Community'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 |
| First Community vs. Community West Bancshares | First Community vs. First Financial Northwest | First Community vs. First Northwest Bancorp | First Community vs. Home Federal Bancorp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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