Correlation Between First Hawaiian and KeyCorp
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and KeyCorp 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 KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and KeyCorp, you can compare the effects of market volatilities on First Hawaiian and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and KeyCorp.
Diversification Opportunities for First Hawaiian and KeyCorp
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and KeyCorp is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of First Hawaiian i.e., First Hawaiian and KeyCorp go up and down completely randomly.
Pair Corralation between First Hawaiian and KeyCorp
Considering the 90-day investment horizon First Hawaiian is expected to generate 1.54 times less return on investment than KeyCorp. But when comparing it to its historical volatility, First Hawaiian is 1.42 times less risky than KeyCorp. It trades about 0.03 of its potential returns per unit of risk. KeyCorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,552 in KeyCorp on September 3, 2024 and sell it today you would earn a total of 396.00 from holding KeyCorp or generate 25.52% 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. KeyCorp
Performance |
| Timeline |
| First Hawaiian |
| KeyCorp |
First Hawaiian and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hawaiian and KeyCorp
The main advantage of trading using opposite First Hawaiian and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
| KeyCorp vs. JPMorgan Chase Co | KeyCorp vs. Citigroup | KeyCorp vs. Wells Fargo | KeyCorp vs. Toronto Dominion Bank |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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