Correlation Between NYSE Composite and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and First Hawaiian 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 NYSE Composite and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and First Hawaiian, you can compare the effects of market volatilities on NYSE Composite and First Hawaiian 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 NYSE Composite with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and First Hawaiian.
Diversification Opportunities for NYSE Composite and First Hawaiian
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and First is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and NYSE Composite 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 NYSE Composite are associated (or correlated) with First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of NYSE Composite i.e., NYSE Composite and First Hawaiian go up and down completely randomly.
Pair Corralation between NYSE Composite and First Hawaiian
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.42 times less return on investment than First Hawaiian. But when comparing it to its historical volatility, NYSE Composite is 4.71 times less risky than First Hawaiian. It trades about 0.42 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,450 in First Hawaiian on September 1, 2024 and sell it today you would earn a total of 311.00 from holding First Hawaiian or generate 12.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. First Hawaiian
Performance |
| Timeline |
NYSE Composite and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
First Hawaiian
Pair trading matchups for First Hawaiian
Pair Trading with NYSE Composite and First Hawaiian
The main advantage of trading using opposite NYSE Composite and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, First Hawaiian 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 First Hawaiian will offset losses from the drop in First Hawaiian's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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