Correlation Between Financial Institutions and Bank of Hawaii
Can any of the company-specific risk be diversified away by investing in both Financial Institutions and Bank of Hawaii 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 Financial Institutions and Bank of Hawaii into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Institutions and Bank of Hawaii, you can compare the effects of market volatilities on Financial Institutions and Bank of Hawaii 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 Financial Institutions with a short position of Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Institutions and Bank of Hawaii.
Diversification Opportunities for Financial Institutions and Bank of Hawaii
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Bank is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Financial Institutions and Bank of Hawaii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Hawaii and Financial Institutions 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 Financial Institutions are associated (or correlated) with Bank of Hawaii. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Hawaii has no effect on the direction of Financial Institutions i.e., Financial Institutions and Bank of Hawaii go up and down completely randomly.
Pair Corralation between Financial Institutions and Bank of Hawaii
Given the investment horizon of 90 days Financial Institutions is expected to generate 1.26 times more return on investment than Bank of Hawaii. However, Financial Institutions is 1.26 times more volatile than Bank of Hawaii. It trades about 0.07 of its potential returns per unit of risk. Bank of Hawaii is currently generating about 0.04 per unit of risk. If you would invest 2,035 in Financial Institutions on August 25, 2024 and sell it today you would earn a total of 755.00 from holding Financial Institutions or generate 37.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Institutions vs. Bank of Hawaii
Performance |
| Timeline |
| Financial Institutions |
| Bank of Hawaii |
Financial Institutions and Bank of Hawaii Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Institutions and Bank of Hawaii
The main advantage of trading using opposite Financial Institutions and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Institutions position performs unexpectedly, Bank of Hawaii 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 Bank of Hawaii will offset losses from the drop in Bank of Hawaii's long position.| Financial Institutions vs. First Community | Financial Institutions vs. Community West Bancshares | Financial Institutions vs. First Financial Northwest | Financial Institutions vs. First Northwest Bancorp |
| Bank of Hawaii vs. Central Pacific Financial | Bank of Hawaii vs. Territorial Bancorp | Bank of Hawaii vs. First Bancorp | Bank of Hawaii 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |