Correlation Between Prosperity Bancshares and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares 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 Prosperity Bancshares and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and First Hawaiian, you can compare the effects of market volatilities on Prosperity Bancshares 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 Prosperity Bancshares with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and First Hawaiian.
Diversification Opportunities for Prosperity Bancshares and First Hawaiian
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Prosperity and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Prosperity Bancshares 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 Prosperity Bancshares 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 Prosperity Bancshares i.e., Prosperity Bancshares and First Hawaiian go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and First Hawaiian
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.83 times more return on investment than First Hawaiian. However, Prosperity Bancshares is 1.2 times less risky than First Hawaiian. It trades about 0.26 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.19 per unit of risk. If you would invest 7,410 in Prosperity Bancshares on August 29, 2024 and sell it today you would earn a total of 1,051 from holding Prosperity Bancshares or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. First Hawaiian
Performance |
| Timeline |
| Prosperity Bancshares |
| First Hawaiian |
Prosperity Bancshares and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and First Hawaiian
The main advantage of trading using opposite Prosperity Bancshares and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares 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.| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American Bancorp |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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