Correlation Between Washington Trust and Territorial Bancorp
Can any of the company-specific risk be diversified away by investing in both Washington Trust and Territorial Bancorp 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 Washington Trust and Territorial Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Trust Bancorp and Territorial Bancorp, you can compare the effects of market volatilities on Washington Trust and Territorial Bancorp 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 Washington Trust with a short position of Territorial Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and Territorial Bancorp.
Diversification Opportunities for Washington Trust and Territorial Bancorp
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Territorial is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and Territorial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Territorial Bancorp and Washington Trust 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 Washington Trust Bancorp are associated (or correlated) with Territorial Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Territorial Bancorp has no effect on the direction of Washington Trust i.e., Washington Trust and Territorial Bancorp go up and down completely randomly.
Pair Corralation between Washington Trust and Territorial Bancorp
Given the investment horizon of 90 days Washington Trust is expected to generate 1.21 times less return on investment than Territorial Bancorp. In addition to that, Washington Trust is 1.35 times more volatile than Territorial Bancorp. It trades about 0.08 of its total potential returns per unit of risk. Territorial Bancorp is currently generating about 0.14 per unit of volatility. If you would invest 1,013 in Territorial Bancorp on August 29, 2024 and sell it today you would earn a total of 82.00 from holding Territorial Bancorp or generate 8.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. Territorial Bancorp
Performance |
| Timeline |
| Washington Trust Bancorp |
| Territorial Bancorp |
Washington Trust and Territorial Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and Territorial Bancorp
The main advantage of trading using opposite Washington Trust and Territorial Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust position performs unexpectedly, Territorial Bancorp 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 Territorial Bancorp will offset losses from the drop in Territorial Bancorp's long position.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| Territorial Bancorp vs. First Hawaiian | Territorial Bancorp vs. Bank of Hawaii | Territorial Bancorp vs. Financial Institutions | Territorial Bancorp 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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