Correlation Between Commercial International and First Hawaiian

Can any of the company-specific risk be diversified away by investing in both Commercial International and First Hawaiian 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 Commercial International and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Commercial International and First Hawaiian

-0.15

Correlation Coefficient

Commercial International  First Hawaiian

Good diversification

The 3 months correlation between Commercial and First is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Commercial International 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 Commercial International Bank are associated (or correlated) with First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of Commercial International i.e., Commercial International and First Hawaiian go up and down completely randomly.

Pair Corralation between Commercial International and First Hawaiian

Assuming the 90 days horizon Commercial International Bank is expected to generate 1.05 times more return on investment than First Hawaiian. However, Commercial International is 1.05 times more volatile than First Hawaiian. It trades about 0.07 of its potential returns per unit of risk. First Hawaiian is currently generating about -0.06 per unit of risk. If you would invest  142.00  in Commercial International Bank on December 29, 2024 and sell it today you would earn a total of  9.00  from holding Commercial International Bank or generate 6.34% return on investment over 90 days.

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

Commercial International Bank  vs.  First Hawaiian

Commercial International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial International Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Commercial International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

First Hawaiian

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Hawaiian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, First Hawaiian is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Commercial International and First Hawaiian

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

The idea behind Commercial International Bank and First Hawaiian 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.