Correlation Between Bank of Hawaii and PNC Financial

Can any of the company-specific risk be diversified away by investing in both Bank of Hawaii and PNC Financial 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 Bank of Hawaii and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Hawaii and PNC Financial Services, you can compare the effects of market volatilities on Bank of Hawaii and PNC Financial 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 Bank of Hawaii with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Hawaii and PNC Financial.

Diversification Opportunities for Bank of Hawaii and PNC Financial

0.74

Correlation Coefficient

Bank of Hawaii  PNC Financial

Poor diversification

The 3 months correlation between Bank and PNC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Hawaii and PNC Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial Services and Bank of Hawaii 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 Bank of Hawaii are associated (or correlated) with PNC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Financial Services has no effect on the direction of Bank of Hawaii i.e., Bank of Hawaii and PNC Financial go up and down completely randomly.

Pair Corralation between Bank of Hawaii and PNC Financial

Considering the 90-day investment horizon Bank of Hawaii is expected to generate 1.09 times more return on investment than PNC Financial. However, Bank of Hawaii is 1.09 times more volatile than PNC Financial Services. It trades about 0.0 of its potential returns per unit of risk. PNC Financial Services is currently generating about -0.12 per unit of risk. If you would invest  7,095  in Bank of Hawaii on December 25, 2024 and sell it today you would lose (74.00) from holding Bank of Hawaii or give up 1.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bank of Hawaii  vs.  PNC Financial Services

Bank of Hawaii

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of Hawaii has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Bank of Hawaii is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

PNC Financial Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNC Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Bank of Hawaii and PNC Financial

The main advantage of trading using opposite Bank of Hawaii and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Hawaii position performs unexpectedly, PNC Financial 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 PNC Financial will offset losses from the drop in PNC Financial's long position.

The idea behind Bank of Hawaii and PNC Financial Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Stocks Directory module to find actively traded stocks across global markets.