Correlation Between Territorial Bancorp and Community Heritage
Can any of the company-specific risk be diversified away by investing in both Territorial Bancorp and Community Heritage 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 Community Heritage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Territorial Bancorp and Community Heritage Financial, you can compare the effects of market volatilities on Territorial Bancorp and Community Heritage 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 Community Heritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Territorial Bancorp and Community Heritage.
Diversification Opportunities for Territorial Bancorp and Community Heritage
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Territorial and Community is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and Community Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Heritage 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 Community Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Heritage has no effect on the direction of Territorial Bancorp i.e., Territorial Bancorp and Community Heritage go up and down completely randomly.
Pair Corralation between Territorial Bancorp and Community Heritage
Given the investment horizon of 90 days Territorial Bancorp is expected to under-perform the Community Heritage. But the stock apears to be less risky and, when comparing its historical volatility, Territorial Bancorp is 1.24 times less risky than Community Heritage. The stock trades about -0.19 of its potential returns per unit of risk. The Community Heritage Financial is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,150 in Community Heritage Financial on September 13, 2024 and sell it today you would earn a total of 150.00 from holding Community Heritage Financial or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Territorial Bancorp vs. Community Heritage Financial
Performance |
| Timeline |
| Territorial Bancorp |
| Community Heritage |
Territorial Bancorp and Community Heritage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Territorial Bancorp and Community Heritage
The main advantage of trading using opposite Territorial Bancorp and Community Heritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Territorial Bancorp position performs unexpectedly, Community Heritage 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 Community Heritage will offset losses from the drop in Community Heritage's long position.| Territorial Bancorp vs. First Hawaiian | Territorial Bancorp vs. Bank of Hawaii | Territorial Bancorp vs. Financial Institutions | Territorial Bancorp vs. Heritage Financial |
| Community Heritage vs. National Capital Bank | Community Heritage vs. Citizens Financial Corp | Community Heritage vs. North Dallas Bank | Community Heritage vs. Lewis Clark 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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