Correlation Between Commerzbank and First Hawaiian

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

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

Diversification Opportunities for Commerzbank and First Hawaiian

0.35

Correlation Coefficient

Commerzbank  First Hawaiian

Weak diversification

The 3 months correlation between Commerzbank and First is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Commerzbank AG and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Commerzbank 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 Commerzbank AG 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 Commerzbank i.e., Commerzbank and First Hawaiian go up and down completely randomly.

Pair Corralation between Commerzbank and First Hawaiian

Assuming the 90 days horizon Commerzbank AG is expected to generate 1.8 times more return on investment than First Hawaiian. However, Commerzbank is 1.8 times more volatile than First Hawaiian. It trades about 0.24 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.0 per unit of risk. If you would invest  1,505  in Commerzbank AG on December 2, 2024 and sell it today you would earn a total of  655.00  from holding Commerzbank AG or generate 43.52% return on investment over 90 days.

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

Commerzbank AG  vs.  First Hawaiian

Commerzbank AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Commerzbank AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, Commerzbank reported solid returns over the last few months and may actually be approaching a breakup point.

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 Commerzbank and First Hawaiian

The main advantage of trading using opposite Commerzbank and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerzbank 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 Commerzbank AG 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.