Correlation Between First Hawaiian and Community Heritage
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and Community Heritage 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 Community Heritage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and Community Heritage Financial, you can compare the effects of market volatilities on First Hawaiian and Community Heritage 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 Community Heritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and Community Heritage.
Diversification Opportunities for First Hawaiian and Community Heritage
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Community is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Community Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Heritage 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 Community Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Heritage has no effect on the direction of First Hawaiian i.e., First Hawaiian and Community Heritage go up and down completely randomly.
Pair Corralation between First Hawaiian and Community Heritage
Considering the 90-day investment horizon First Hawaiian is expected to generate 8.18 times less return on investment than Community Heritage. But when comparing it to its historical volatility, First Hawaiian is 1.26 times less risky than Community Heritage. It trades about 0.05 of its potential returns per unit of risk. Community Heritage Financial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,150 in Community Heritage Financial on September 13, 2024 and sell it today you would earn a total of 150.00 from holding Community Heritage Financial or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Hawaiian vs. Community Heritage Financial
Performance |
| Timeline |
| First Hawaiian |
| Community Heritage |
First Hawaiian and Community Heritage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hawaiian and Community Heritage
The main advantage of trading using opposite First Hawaiian and Community Heritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, Community Heritage 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 Community Heritage will offset losses from the drop in Community Heritage's long position.| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
| Community Heritage vs. National Capital Bank | Community Heritage vs. Citizens Financial Corp | Community Heritage vs. North Dallas Bank | Community Heritage vs. Lewis Clark 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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