Correlation Between First Hawaiian and Mountain Commerce
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and Mountain Commerce 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 Mountain Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and Mountain Commerce Bancorp, you can compare the effects of market volatilities on First Hawaiian and Mountain Commerce 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 Mountain Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and Mountain Commerce.
Diversification Opportunities for First Hawaiian and Mountain Commerce
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Mountain is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Mountain Commerce Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Commerce Bancorp 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 Mountain Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Commerce Bancorp has no effect on the direction of First Hawaiian i.e., First Hawaiian and Mountain Commerce go up and down completely randomly.
Pair Corralation between First Hawaiian and Mountain Commerce
Considering the 90-day investment horizon First Hawaiian is expected to generate 5.51 times more return on investment than Mountain Commerce. However, First Hawaiian is 5.51 times more volatile than Mountain Commerce Bancorp. It trades about 0.2 of its potential returns per unit of risk. Mountain Commerce Bancorp is currently generating about 0.56 per unit of risk. If you would invest 2,479 in First Hawaiian on September 3, 2024 and sell it today you would earn a total of 282.00 from holding First Hawaiian or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hawaiian vs. Mountain Commerce Bancorp
Performance |
| Timeline |
| First Hawaiian |
| Mountain Commerce Bancorp |
First Hawaiian and Mountain Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hawaiian and Mountain Commerce
The main advantage of trading using opposite First Hawaiian and Mountain Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, Mountain Commerce 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 Mountain Commerce will offset losses from the drop in Mountain Commerce's long position.| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
| Mountain Commerce vs. First Hawaiian | Mountain Commerce vs. Central Pacific Financial | Mountain Commerce vs. Territorial Bancorp | Mountain Commerce 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |