Correlation Between Truist Financial and Bank of Hawaii
Can any of the company-specific risk be diversified away by investing in both Truist Financial and Bank of Hawaii 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 Truist Financial and Bank of Hawaii into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Bank of Hawaii, you can compare the effects of market volatilities on Truist Financial and Bank of Hawaii 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 Truist Financial with a short position of Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Bank of Hawaii.
Diversification Opportunities for Truist Financial and Bank of Hawaii
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Truist and Bank is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Bank of Hawaii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Hawaii and Truist Financial 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 Truist Financial are associated (or correlated) with Bank of Hawaii. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Hawaii has no effect on the direction of Truist Financial i.e., Truist Financial and Bank of Hawaii go up and down completely randomly.
Pair Corralation between Truist Financial and Bank of Hawaii
Assuming the 90 days trading horizon Truist Financial is expected to under-perform the Bank of Hawaii. But the preferred stock apears to be less risky and, when comparing its historical volatility, Truist Financial is 2.53 times less risky than Bank of Hawaii. The preferred stock trades about -0.09 of its potential returns per unit of risk. The Bank of Hawaii is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 7,167 in Bank of Hawaii on August 29, 2024 and sell it today you would earn a total of 814.00 from holding Bank of Hawaii or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. Bank of Hawaii
Performance |
| Timeline |
| Truist Financial |
| Bank of Hawaii |
Truist Financial and Bank of Hawaii Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and Bank of Hawaii
The main advantage of trading using opposite Truist Financial and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial position performs unexpectedly, Bank of Hawaii 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 Bank of Hawaii will offset losses from the drop in Bank of Hawaii's long position.| Truist Financial vs. Truist Financial | Truist Financial vs. MetLife Preferred Stock | Truist Financial vs. US Bancorp |
| Bank of Hawaii vs. Central Pacific Financial | Bank of Hawaii vs. Territorial Bancorp | Bank of Hawaii vs. First Bancorp | Bank of Hawaii vs. Hancock Whitney Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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