Correlation Between US Bancorp and Bank of Hawaii
Can any of the company-specific risk be diversified away by investing in both US Bancorp 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 US Bancorp 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 US Bancorp and Bank of Hawaii, you can compare the effects of market volatilities on US Bancorp 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 US Bancorp with a short position of Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Bancorp and Bank of Hawaii.
Diversification Opportunities for US Bancorp and Bank of Hawaii
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USB-PR and Bank is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding US Bancorp 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 US 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 US Bancorp 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 US Bancorp i.e., US Bancorp and Bank of Hawaii go up and down completely randomly.
Pair Corralation between US Bancorp and Bank of Hawaii
Assuming the 90 days trading horizon US Bancorp is expected to generate 0.73 times more return on investment than Bank of Hawaii. However, US Bancorp is 1.36 times less risky than Bank of Hawaii. It trades about 0.08 of its potential returns per unit of risk. Bank of Hawaii is currently generating about 0.05 per unit of risk. If you would invest 1,709 in US Bancorp on September 1, 2024 and sell it today you would earn a total of 154.00 from holding US Bancorp or generate 9.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Bancorp vs. Bank of Hawaii
Performance |
| Timeline |
| US Bancorp |
| Bank of Hawaii |
US Bancorp and Bank of Hawaii Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Bancorp and Bank of Hawaii
The main advantage of trading using opposite US Bancorp and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Bancorp 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.| US Bancorp vs. US Bancorp | US Bancorp vs. Bank of America | US Bancorp vs. US Bancorp | US Bancorp vs. Wells Fargo |
| Bank of Hawaii vs. Fifth Third Bancorp | Bank of Hawaii vs. Fifth Third Bancorp | Bank of Hawaii vs. First Citizens BancShares | Bank of Hawaii vs. Huntington Bancshares Incorporated |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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