Correlation Between PacWest Bancorp and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both PacWest Bancorp 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 PacWest Bancorp and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PacWest Bancorp and First Hawaiian, you can compare the effects of market volatilities on PacWest Bancorp 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 PacWest Bancorp with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of PacWest Bancorp and First Hawaiian.
Diversification Opportunities for PacWest Bancorp and First Hawaiian
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PacWest and First is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PacWest Bancorp and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and PacWest Bancorp 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 PacWest Bancorp 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 PacWest Bancorp i.e., PacWest Bancorp and First Hawaiian go up and down completely randomly.
Pair Corralation between PacWest Bancorp and First Hawaiian
If you would invest 2,477 in First Hawaiian on August 30, 2024 and sell it today you would earn a total of 283.00 from holding First Hawaiian or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
PacWest Bancorp vs. First Hawaiian
Performance |
| Timeline |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Hawaiian |
PacWest Bancorp and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PacWest Bancorp and First Hawaiian
The main advantage of trading using opposite PacWest Bancorp and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PacWest Bancorp 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.| PacWest Bancorp vs. Zions Bancorporation | PacWest Bancorp vs. KeyCorp | PacWest Bancorp vs. Comerica | PacWest Bancorp vs. First Horizon National |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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