Correlation Between First Hawaiian and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both First Hawaiian and SCOTT TECHNOLOGY 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 First Hawaiian and SCOTT TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hawaiian and SCOTT TECHNOLOGY, you can compare the effects of market volatilities on First Hawaiian and SCOTT TECHNOLOGY 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 First Hawaiian with a short position of SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and SCOTT TECHNOLOGY.
Diversification Opportunities for First Hawaiian and SCOTT TECHNOLOGY
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and SCOTT is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY and First Hawaiian 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 First Hawaiian are associated (or correlated) with SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of First Hawaiian i.e., First Hawaiian and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between First Hawaiian and SCOTT TECHNOLOGY
Assuming the 90 days horizon First Hawaiian is expected to generate 0.76 times more return on investment than SCOTT TECHNOLOGY. However, First Hawaiian is 1.32 times less risky than SCOTT TECHNOLOGY. It trades about 0.13 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.06 per unit of risk. If you would invest 2,059 in First Hawaiian on October 10, 2024 and sell it today you would earn a total of 361.00 from holding First Hawaiian or generate 17.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
First Hawaiian vs. SCOTT TECHNOLOGY
Performance |
Timeline |
First Hawaiian |
SCOTT TECHNOLOGY |
First Hawaiian and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First Hawaiian and SCOTT TECHNOLOGY
The main advantage of trading using opposite First Hawaiian and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.First Hawaiian vs. Monster Beverage Corp | First Hawaiian vs. Take Two Interactive Software | First Hawaiian vs. Wayside Technology Group | First Hawaiian vs. Thai Beverage Public |
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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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