Correlation Between Territorial Bancorp and National Bank
Can any of the company-specific risk be diversified away by investing in both Territorial Bancorp and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Territorial Bancorp and National Bank Holdings, you can compare the effects of market volatilities on Territorial Bancorp and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Territorial Bancorp and National Bank.
Diversification Opportunities for Territorial Bancorp and National Bank
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Territorial and National is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Territorial Bancorp i.e., Territorial Bancorp and National Bank go up and down completely randomly.
Pair Corralation between Territorial Bancorp and National Bank
Given the investment horizon of 90 days Territorial Bancorp is expected to generate 1.21 times less return on investment than National Bank. In addition to that, Territorial Bancorp is 1.22 times more volatile than National Bank Holdings. It trades about 0.06 of its total potential returns per unit of risk. National Bank Holdings is currently generating about 0.09 per unit of volatility. If you would invest 3,214 in National Bank Holdings on August 25, 2024 and sell it today you would earn a total of 1,673 from holding National Bank Holdings or generate 52.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Territorial Bancorp vs. National Bank Holdings
Performance |
| Timeline |
| Territorial Bancorp |
| National Bank Holdings |
Territorial Bancorp and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Territorial Bancorp and National Bank
The main advantage of trading using opposite Territorial Bancorp and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Territorial Bancorp position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Territorial Bancorp vs. First Hawaiian | Territorial Bancorp vs. Bank of Hawaii | Territorial Bancorp vs. Financial Institutions | Territorial Bancorp vs. Heritage Financial |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |