Correlation Between Bank of Hawaii and Financial Institutions
Can any of the company-specific risk be diversified away by investing in both Bank of Hawaii and Financial Institutions 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 Financial Institutions 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 Financial Institutions, you can compare the effects of market volatilities on Bank of Hawaii and Financial Institutions 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 Financial Institutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Hawaii and Financial Institutions.
Diversification Opportunities for Bank of Hawaii and Financial Institutions
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Financial is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Hawaii and Financial Institutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Institutions 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 Financial Institutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Institutions has no effect on the direction of Bank of Hawaii i.e., Bank of Hawaii and Financial Institutions go up and down completely randomly.
Pair Corralation between Bank of Hawaii and Financial Institutions
Considering the 90-day investment horizon Bank of Hawaii is expected to generate 2.02 times less return on investment than Financial Institutions. But when comparing it to its historical volatility, Bank of Hawaii is 1.26 times less risky than Financial Institutions. It trades about 0.04 of its potential returns per unit of risk. Financial Institutions is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,035 in Financial Institutions on August 25, 2024 and sell it today you would earn a total of 755.00 from holding Financial Institutions or generate 37.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Hawaii vs. Financial Institutions
Performance |
| Timeline |
| Bank of Hawaii |
| Financial Institutions |
Bank of Hawaii and Financial Institutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Hawaii and Financial Institutions
The main advantage of trading using opposite Bank of Hawaii and Financial Institutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Hawaii position performs unexpectedly, Financial Institutions 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 Financial Institutions will offset losses from the drop in Financial Institutions' 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 |
| Financial Institutions vs. First Community | Financial Institutions vs. Community West Bancshares | Financial Institutions vs. First Financial Northwest | Financial Institutions vs. First Northwest 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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