Correlation Between Regions Financial and Bank of Hawaii
Can any of the company-specific risk be diversified away by investing in both Regions Financial 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 Regions Financial 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 Regions Financial and Bank of Hawaii, you can compare the effects of market volatilities on Regions Financial 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 Regions Financial with a short position of Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and Bank of Hawaii.
Diversification Opportunities for Regions Financial and Bank of Hawaii
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regions and Bank is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial 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 Regions Financial 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 Regions Financial 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 Regions Financial i.e., Regions Financial and Bank of Hawaii go up and down completely randomly.
Pair Corralation between Regions Financial and Bank of Hawaii
Allowing for the 90-day total investment horizon Regions Financial is expected to generate 1.61 times less return on investment than Bank of Hawaii. But when comparing it to its historical volatility, Regions Financial is 1.15 times less risky than Bank of Hawaii. It trades about 0.17 of its potential returns per unit of risk. Bank of Hawaii is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 6,252 in Bank of Hawaii on August 25, 2024 and sell it today you would earn a total of 1,776 from holding Bank of Hawaii or generate 28.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. Bank of Hawaii
Performance |
| Timeline |
| Regions Financial |
| Bank of Hawaii |
Regions Financial and Bank of Hawaii Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and Bank of Hawaii
The main advantage of trading using opposite Regions Financial and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial 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.| Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Zions Bancorporation | Regions Financial vs. Huntington Bancshares Incorporated | Regions Financial vs. PNC Financial Services |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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