Correlation Between Territorial Bancorp and Harbor Bankshares
Can any of the company-specific risk be diversified away by investing in both Territorial Bancorp and Harbor Bankshares 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 Harbor Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Territorial Bancorp and Harbor Bankshares, you can compare the effects of market volatilities on Territorial Bancorp and Harbor Bankshares 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 Harbor Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Territorial Bancorp and Harbor Bankshares.
Diversification Opportunities for Territorial Bancorp and Harbor Bankshares
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Territorial and Harbor is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Bankshares 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 Harbor Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Bankshares has no effect on the direction of Territorial Bancorp i.e., Territorial Bancorp and Harbor Bankshares go up and down completely randomly.
Pair Corralation between Territorial Bancorp and Harbor Bankshares
Given the investment horizon of 90 days Territorial Bancorp is expected to under-perform the Harbor Bankshares. But the stock apears to be less risky and, when comparing its historical volatility, Territorial Bancorp is 1.82 times less risky than Harbor Bankshares. The stock trades about -0.03 of its potential returns per unit of risk. The Harbor Bankshares is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,325 in Harbor Bankshares on September 3, 2024 and sell it today you would earn a total of 75.00 from holding Harbor Bankshares or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.4% |
| Values | Daily Returns |
Territorial Bancorp vs. Harbor Bankshares
Performance |
| Timeline |
| Territorial Bancorp |
| Harbor Bankshares |
Territorial Bancorp and Harbor Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Territorial Bancorp and Harbor Bankshares
The main advantage of trading using opposite Territorial Bancorp and Harbor Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Territorial Bancorp position performs unexpectedly, Harbor Bankshares 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 Harbor Bankshares will offset losses from the drop in Harbor Bankshares' long position.| Territorial Bancorp vs. First Hawaiian | Territorial Bancorp vs. Bank of Hawaii | Territorial Bancorp vs. Financial Institutions | Territorial Bancorp vs. Heritage Financial |
| Harbor Bankshares vs. First Hawaiian | Harbor Bankshares vs. Central Pacific Financial | Harbor Bankshares vs. Territorial Bancorp | Harbor Bankshares vs. Comerica |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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