Correlation Between Citizens Financial and Bank of Hawaii

Can any of the company-specific risk be diversified away by investing in both Citizens Financial 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 Citizens Financial 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 Citizens Financial Group and Bank of Hawaii, you can compare the effects of market volatilities on Citizens Financial 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 Citizens Financial with a short position of Bank of Hawaii. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Bank of Hawaii.

Diversification Opportunities for Citizens Financial and Bank of Hawaii

0.78

Correlation Coefficient

Citizens Financial  Bank of Hawaii

Poor diversification

The 3 months correlation between Citizens and Bank is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group 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 Citizens Financial 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 Citizens Financial Group 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 Citizens Financial i.e., Citizens Financial and Bank of Hawaii go up and down completely randomly.

Pair Corralation between Citizens Financial and Bank of Hawaii

Assuming the 90 days trading horizon Citizens Financial Group is expected to generate 1.21 times more return on investment than Bank of Hawaii. However, Citizens Financial is 1.21 times more volatile than Bank of Hawaii. It trades about 0.06 of its potential returns per unit of risk. Bank of Hawaii is currently generating about 0.06 per unit of risk. If you would invest  1,871  in Citizens Financial Group on December 30, 2024 and sell it today you would earn a total of  81.00  from holding Citizens Financial Group or generate 4.33% return on investment over 90 days.

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

Citizens Financial Group  vs.  Bank of Hawaii

Citizens Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Bank of Hawaii

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Hawaii are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Bank of Hawaii is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citizens Financial and Bank of Hawaii

The main advantage of trading using opposite Citizens Financial and Bank of Hawaii positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial 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.

The idea behind Citizens Financial Group and Bank of Hawaii 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.