Correlation Between Visa and Bank of Hawaii
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa 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 Visa Class A and Bank of Hawaii, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Bank of Hawaii.
Diversification Opportunities for Visa and Bank of Hawaii
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Visa and Bank is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Bank of Hawaii go up and down completely randomly.
Pair Corralation between Visa and Bank of Hawaii
Taking into account the 90-day investment horizon Visa is expected to generate 2.01 times less return on investment than Bank of Hawaii. But when comparing it to its historical volatility, Visa Class A is 2.19 times less risky than Bank of Hawaii. It trades about 0.27 of its potential returns per unit of risk. Bank of Hawaii is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6,216 in Bank of Hawaii on August 29, 2024 and sell it today you would earn a total of 1,765 from holding Bank of Hawaii or generate 28.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Bank of Hawaii
Performance |
| Timeline |
| Visa Class A |
| Bank of Hawaii |
Visa and Bank of Hawaii Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Bank of Hawaii
The main advantage of trading using opposite Visa and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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