Correlation Between First Hawaiian and Bank of San
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and Bank of San 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 Hawaiian and Bank of San into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and Bank of San, you can compare the effects of market volatilities on First Hawaiian and Bank of San 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 Hawaiian with a short position of Bank of San. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and Bank of San.
Diversification Opportunities for First Hawaiian and Bank of San
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Bank is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Bank of San in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of San and First Hawaiian 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 Hawaiian are associated (or correlated) with Bank of San. 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 San has no effect on the direction of First Hawaiian i.e., First Hawaiian and Bank of San go up and down completely randomly.
Pair Corralation between First Hawaiian and Bank of San
Considering the 90-day investment horizon First Hawaiian is expected to generate 1.47 times more return on investment than Bank of San. However, First Hawaiian is 1.47 times more volatile than Bank of San. It trades about 0.03 of its potential returns per unit of risk. Bank of San is currently generating about 0.02 per unit of risk. If you would invest 2,298 in First Hawaiian on September 3, 2024 and sell it today you would earn a total of 463.00 from holding First Hawaiian or generate 20.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hawaiian vs. Bank of San
Performance |
| Timeline |
| First Hawaiian |
| Bank of San |
First Hawaiian and Bank of San Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hawaiian and Bank of San
The main advantage of trading using opposite First Hawaiian and Bank of San positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, Bank of San 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 San will offset losses from the drop in Bank of San's long position.| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
| Bank of San vs. First Hawaiian | Bank of San vs. Central Pacific Financial | Bank of San vs. Territorial Bancorp | Bank of San vs. Comerica |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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