Correlation Between First Financial and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both First Financial 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 First Financial and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Financial Northwest and First Hawaiian, you can compare the effects of market volatilities on First Financial 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 First Financial with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Financial and First Hawaiian.
Diversification Opportunities for First Financial and First Hawaiian
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and First is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding First Financial Northwest and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and First 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 First Financial Northwest 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 First Financial i.e., First Financial and First Hawaiian go up and down completely randomly.
Pair Corralation between First Financial and First Hawaiian
Given the investment horizon of 90 days First Financial Northwest is expected to under-perform the First Hawaiian. But the stock apears to be less risky and, when comparing its historical volatility, First Financial Northwest is 2.65 times less risky than First Hawaiian. The stock trades about -0.03 of its potential returns per unit of risk. The First Hawaiian is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,376 in First Hawaiian on August 25, 2024 and sell it today you would earn a total of 414.00 from holding First Hawaiian or generate 17.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Financial Northwest vs. First Hawaiian
Performance |
| Timeline |
| First Financial Northwest |
| First Hawaiian |
First Financial and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Financial and First Hawaiian
The main advantage of trading using opposite First Financial and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Financial 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.| First Financial vs. Fifth Third Bancorp | First Financial vs. Zions Bancorporation | First Financial vs. Huntington Bancshares Incorporated | First Financial vs. PNC Financial Services |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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