Correlation Between First Hawaiian and Parke Bancorp
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and Parke Bancorp 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 Parke Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and Parke Bancorp, you can compare the effects of market volatilities on First Hawaiian and Parke Bancorp 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 Parke Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and Parke Bancorp.
Diversification Opportunities for First Hawaiian and Parke Bancorp
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Parke is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Parke Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parke 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 Parke Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parke Bancorp has no effect on the direction of First Hawaiian i.e., First Hawaiian and Parke Bancorp go up and down completely randomly.
Pair Corralation between First Hawaiian and Parke Bancorp
Considering the 90-day investment horizon First Hawaiian is expected to generate 0.84 times more return on investment than Parke Bancorp. However, First Hawaiian is 1.19 times less risky than Parke Bancorp. It trades about 0.07 of its potential returns per unit of risk. Parke Bancorp is currently generating about 0.05 per unit of risk. If you would invest 2,186 in First Hawaiian on August 25, 2024 and sell it today you would earn a total of 604.00 from holding First Hawaiian or generate 27.63% 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. Parke Bancorp
Performance |
| Timeline |
| First Hawaiian |
| Parke Bancorp |
First Hawaiian and Parke Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hawaiian and Parke Bancorp
The main advantage of trading using opposite First Hawaiian and Parke Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, Parke Bancorp 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 Parke Bancorp will offset losses from the drop in Parke Bancorp's long position.| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
| Parke Bancorp vs. Sound Financial Bancorp | Parke Bancorp vs. Finward Bancorp | Parke Bancorp vs. Franklin Financial Services | Parke Bancorp vs. Community West Bancshares |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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