Correlation Between Traditions Bank and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both Traditions Bank and First Hawaiian 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 Traditions Bank and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Traditions Bank and First Hawaiian, you can compare the effects of market volatilities on Traditions Bank and First Hawaiian 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 Traditions Bank with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Traditions Bank and First Hawaiian.
Diversification Opportunities for Traditions Bank and First Hawaiian
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Traditions and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Traditions Bank and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Traditions Bank 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 Traditions Bank are associated (or correlated) with First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of Traditions Bank i.e., Traditions Bank and First Hawaiian go up and down completely randomly.
Pair Corralation between Traditions Bank and First Hawaiian
Given the investment horizon of 90 days Traditions Bank is expected to generate 1.44 times more return on investment than First Hawaiian. However, Traditions Bank is 1.44 times more volatile than First Hawaiian. It trades about 0.3 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.18 per unit of risk. If you would invest 2,768 in Traditions Bank on September 4, 2024 and sell it today you would earn a total of 731.00 from holding Traditions Bank or generate 26.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Traditions Bank vs. First Hawaiian
Performance |
| Timeline |
| Traditions Bank |
| First Hawaiian |
Traditions Bank and First Hawaiian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Traditions Bank and First Hawaiian
The main advantage of trading using opposite Traditions Bank and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Traditions Bank position performs unexpectedly, First Hawaiian 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 First Hawaiian will offset losses from the drop in First Hawaiian's long position.| Traditions Bank vs. Franklin Financial Services | Traditions Bank vs. ENB Financial Corp | Traditions Bank vs. Community Heritage Financial | Traditions Bank vs. Potomac Bancshares |
| First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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