Correlation Between Territorial Bancorp and BankFirst Capital
Can any of the company-specific risk be diversified away by investing in both Territorial Bancorp and BankFirst Capital 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 Territorial Bancorp and BankFirst Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Territorial Bancorp and BankFirst Capital, you can compare the effects of market volatilities on Territorial Bancorp and BankFirst Capital 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 Territorial Bancorp with a short position of BankFirst Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Territorial Bancorp and BankFirst Capital.
Diversification Opportunities for Territorial Bancorp and BankFirst Capital
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Territorial and BankFirst is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and BankFirst Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFirst Capital and Territorial 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 Territorial Bancorp are associated (or correlated) with BankFirst Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFirst Capital has no effect on the direction of Territorial Bancorp i.e., Territorial Bancorp and BankFirst Capital go up and down completely randomly.
Pair Corralation between Territorial Bancorp and BankFirst Capital
Given the investment horizon of 90 days Territorial Bancorp is expected to generate 2.82 times more return on investment than BankFirst Capital. However, Territorial Bancorp is 2.82 times more volatile than BankFirst Capital. It trades about -0.03 of its potential returns per unit of risk. BankFirst Capital is currently generating about -0.32 per unit of risk. If you would invest 839.00 in Territorial Bancorp on January 17, 2025 and sell it today you would lose (6.00) from holding Territorial Bancorp or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.17% |
| Values | Daily Returns |
Territorial Bancorp vs. BankFirst Capital
Performance |
| Timeline |
| Territorial Bancorp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| BankFirst Capital |
Territorial Bancorp and BankFirst Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Territorial Bancorp and BankFirst Capital
The main advantage of trading using opposite Territorial Bancorp and BankFirst Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Territorial Bancorp position performs unexpectedly, BankFirst Capital 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 BankFirst Capital will offset losses from the drop in BankFirst Capital's long position.| Territorial Bancorp vs. First Hawaiian | Territorial Bancorp vs. Bank of Hawaii | Territorial Bancorp vs. Financial Institutions | Territorial Bancorp vs. Heritage Financial |
| BankFirst Capital vs. Harbor Bankshares | BankFirst Capital vs. Citizens Bancshares Corp | BankFirst Capital vs. Security Federal | BankFirst Capital vs. MF Bancorp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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