Correlation Between ESSA Bancorp and Bank of Hawaii
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp 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 ESSA Bancorp 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 ESSA Bancorp and Bank of Hawaii, you can compare the effects of market volatilities on ESSA Bancorp 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 ESSA Bancorp with a short position of Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Bank of Hawaii.
Diversification Opportunities for ESSA Bancorp and Bank of Hawaii
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ESSA and Bank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp 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 ESSA Bancorp 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 ESSA Bancorp 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 ESSA Bancorp i.e., ESSA Bancorp and Bank of Hawaii go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Bank of Hawaii
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 2.02 times more return on investment than Bank of Hawaii. However, ESSA Bancorp is 2.02 times more volatile than Bank of Hawaii. It trades about 0.12 of its potential returns per unit of risk. Bank of Hawaii is currently generating about -0.11 per unit of risk. If you would invest 1,902 in ESSA Bancorp on August 29, 2024 and sell it today you would earn a total of 117.00 from holding ESSA Bancorp or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESSA Bancorp vs. Bank of Hawaii
Performance |
| Timeline |
| ESSA Bancorp |
| Bank of Hawaii |
ESSA Bancorp and Bank of Hawaii Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Bank of Hawaii
The main advantage of trading using opposite ESSA Bancorp and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp 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.| ESSA Bancorp vs. Community West Bancshares | ESSA Bancorp vs. First Northwest Bancorp | ESSA Bancorp vs. First Community | ESSA Bancorp vs. Oak Valley Bancorp |
| Bank of Hawaii vs. Truist Financial | Bank of Hawaii vs. MetLife Preferred Stock | Bank of Hawaii vs. US 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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