Correlation Between First Hawaiian and Central Pacific
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and Central Pacific 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 Central Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and Central Pacific Financial, you can compare the effects of market volatilities on First Hawaiian and Central Pacific 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 Central Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and Central Pacific.
Diversification Opportunities for First Hawaiian and Central Pacific
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Central is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Central Pacific Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Pacific Financial 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 Central Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Pacific Financial has no effect on the direction of First Hawaiian i.e., First Hawaiian and Central Pacific go up and down completely randomly.
Pair Corralation between First Hawaiian and Central Pacific
Considering the 90-day investment horizon First Hawaiian is expected to generate 0.54 times more return on investment than Central Pacific. However, First Hawaiian is 1.84 times less risky than Central Pacific. It trades about 0.08 of its potential returns per unit of risk. Central Pacific Financial is currently generating about -0.01 per unit of risk. If you would invest 2,595 in First Hawaiian on October 28, 2024 and sell it today you would earn a total of 41.00 from holding First Hawaiian or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hawaiian vs. Central Pacific Financial
Performance |
| Timeline |
| First Hawaiian |
| Central Pacific Financial |
First Hawaiian and Central Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hawaiian and Central Pacific
The main advantage of trading using opposite First Hawaiian and Central Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, Central Pacific 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 Central Pacific will offset losses from the drop in Central Pacific's long position.| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
| Central Pacific vs. Bank of Hawaii | Central Pacific vs. Territorial Bancorp | Central Pacific vs. First Bancorp | Central Pacific vs. Hancock Whitney Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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