Correlation Between Farmers Bancorp and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both Farmers Bancorp and First Hawaiian 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 Farmers Bancorp and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers Bancorp and First Hawaiian, you can compare the effects of market volatilities on Farmers Bancorp and First Hawaiian 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 Farmers Bancorp with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Bancorp and First Hawaiian.
Diversification Opportunities for Farmers Bancorp and First Hawaiian
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Farmers and First is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Bancorp and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Farmers 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 Farmers Bancorp are associated (or correlated) with First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of Farmers Bancorp i.e., Farmers Bancorp and First Hawaiian go up and down completely randomly.
Pair Corralation between Farmers Bancorp and First Hawaiian
Given the investment horizon of 90 days Farmers Bancorp is expected to generate 2.06 times more return on investment than First Hawaiian. However, Farmers Bancorp is 2.06 times more volatile than First Hawaiian. It trades about 0.28 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.02 per unit of risk. If you would invest 3,425 in Farmers Bancorp on September 12, 2024 and sell it today you would earn a total of 375.00 from holding Farmers Bancorp or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmers Bancorp vs. First Hawaiian
Performance |
| Timeline |
| Farmers Bancorp |
| First Hawaiian |
Farmers Bancorp and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Bancorp and First Hawaiian
The main advantage of trading using opposite Farmers Bancorp and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Bancorp position performs unexpectedly, First Hawaiian 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 Hawaiian will offset losses from the drop in First Hawaiian's long position.| Farmers Bancorp vs. PT Bank Rakyat | Farmers Bancorp vs. Morningstar Unconstrained Allocation | Farmers Bancorp vs. Bondbloxx ETF Trust | Farmers Bancorp vs. Spring Valley Acquisition |
| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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