Correlation Between First Hawaiian and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and Metropolitan Bank 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 Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and Metropolitan Bank and, you can compare the effects of market volatilities on First Hawaiian and Metropolitan Bank 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 Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and Metropolitan Bank.
Diversification Opportunities for First Hawaiian and Metropolitan Bank
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Metropolitan is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Metropolitan Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank 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 Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank has no effect on the direction of First Hawaiian i.e., First Hawaiian and Metropolitan Bank go up and down completely randomly.
Pair Corralation between First Hawaiian and Metropolitan Bank
Considering the 90-day investment horizon First Hawaiian is expected to under-perform the Metropolitan Bank. But the stock apears to be less risky and, when comparing its historical volatility, First Hawaiian is 1.28 times less risky than Metropolitan Bank. The stock trades about -0.2 of its potential returns per unit of risk. The Metropolitan Bank and is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,435 in Metropolitan Bank and on January 14, 2025 and sell it today you would earn a total of 265.00 from holding Metropolitan Bank and or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hawaiian vs. Metropolitan Bank and
Performance |
| Timeline |
| First Hawaiian |
| Metropolitan Bank |
First Hawaiian and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hawaiian and Metropolitan Bank
The main advantage of trading using opposite First Hawaiian and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, Metropolitan Bank 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial | First Hawaiian vs. Central Pacific Financial |
| Metropolitan Bank vs. PACCAR Inc | Metropolitan Bank vs. Helmerich and Payne | Metropolitan Bank vs. Rivian Automotive | Metropolitan Bank vs. FDG Electric Vehicles |
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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