Correlation Between Territorial Bancorp and InBankshares Corp
Can any of the company-specific risk be diversified away by investing in both Territorial Bancorp and InBankshares Corp 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 InBankshares Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Territorial Bancorp and InBankshares Corp, you can compare the effects of market volatilities on Territorial Bancorp and InBankshares Corp 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 InBankshares Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Territorial Bancorp and InBankshares Corp.
Diversification Opportunities for Territorial Bancorp and InBankshares Corp
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Territorial and InBankshares is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and InBankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InBankshares Corp 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 InBankshares Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InBankshares Corp has no effect on the direction of Territorial Bancorp i.e., Territorial Bancorp and InBankshares Corp go up and down completely randomly.
Pair Corralation between Territorial Bancorp and InBankshares Corp
Given the investment horizon of 90 days Territorial Bancorp is expected to generate 4.75 times more return on investment than InBankshares Corp. However, Territorial Bancorp is 4.75 times more volatile than InBankshares Corp. It trades about 0.14 of its potential returns per unit of risk. InBankshares Corp is currently generating about 0.27 per unit of risk. If you would invest 1,008 in Territorial Bancorp on September 3, 2024 and sell it today you would earn a total of 73.00 from holding Territorial Bancorp or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Territorial Bancorp vs. InBankshares Corp
Performance |
| Timeline |
| Territorial Bancorp |
| InBankshares Corp |
Territorial Bancorp and InBankshares Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Territorial Bancorp and InBankshares Corp
The main advantage of trading using opposite Territorial Bancorp and InBankshares Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Territorial Bancorp position performs unexpectedly, InBankshares Corp 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 InBankshares Corp will offset losses from the drop in InBankshares Corp's long position.| Territorial Bancorp vs. First Hawaiian | Territorial Bancorp vs. Bank of Hawaii | Territorial Bancorp vs. Financial Institutions | Territorial Bancorp vs. Heritage Financial |
| InBankshares Corp vs. First Hawaiian | InBankshares Corp vs. Central Pacific Financial | InBankshares Corp vs. Territorial Bancorp | InBankshares Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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