Correlation Between Citizens Financial and Bank of Hawaii
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Bank of Hawaii 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 Citizens Financial and Bank of Hawaii into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and Bank of Hawaii, you can compare the effects of market volatilities on Citizens Financial and Bank of Hawaii 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 Citizens Financial with a short position of Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Bank of Hawaii.
Diversification Opportunities for Citizens Financial and Bank of Hawaii
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and Bank is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Bank of Hawaii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Hawaii and Citizens Financial 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 Citizens Financial Group are associated (or correlated) with Bank of Hawaii. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Hawaii has no effect on the direction of Citizens Financial i.e., Citizens Financial and Bank of Hawaii go up and down completely randomly.
Pair Corralation between Citizens Financial and Bank of Hawaii
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Bank of Hawaii. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 2.73 times less risky than Bank of Hawaii. The preferred stock trades about -0.24 of its potential returns per unit of risk. The Bank of Hawaii is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 6,252 in Bank of Hawaii on August 25, 2024 and sell it today you would earn a total of 1,776 from holding Bank of Hawaii or generate 28.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Bank of Hawaii
Performance |
| Timeline |
| Citizens Financial |
| Bank of Hawaii |
Citizens Financial and Bank of Hawaii Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Bank of Hawaii
The main advantage of trading using opposite Citizens Financial and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Bank of Hawaii 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 Bank of Hawaii will offset losses from the drop in Bank of Hawaii's long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America | Citizens Financial vs. KeyCorp |
| 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 |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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