Correlation Between First Hawaiian and CIB Marine

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

By analyzing existing cross correlation between First Hawaiian and CIB Marine Bancshares, you can compare the effects of market volatilities on First Hawaiian and CIB Marine 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 CIB Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and CIB Marine.

Diversification Opportunities for First Hawaiian and CIB Marine

0.35

Correlation Coefficient

First Hawaiian  CIB Marine

Weak diversification

The 3 months correlation between First and CIB is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and CIB Marine Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIB Marine Bancshares 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 CIB Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIB Marine Bancshares has no effect on the direction of First Hawaiian i.e., First Hawaiian and CIB Marine go up and down completely randomly.

Pair Corralation between First Hawaiian and CIB Marine

Considering the 90-day investment horizon First Hawaiian is expected to under-perform the CIB Marine. But the stock apears to be less risky and, when comparing its historical volatility, First Hawaiian is 1.47 times less risky than CIB Marine. The stock trades about -0.04 of its potential returns per unit of risk. The CIB Marine Bancshares is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,680  in CIB Marine Bancshares on December 26, 2024 and sell it today you would earn a total of  270.00  from holding CIB Marine Bancshares or generate 10.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

First Hawaiian  vs.  CIB Marine Bancshares

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.

CIB Marine Bancshares

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CIB Marine Bancshares are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental drivers, CIB Marine may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with First Hawaiian and CIB Marine

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

The idea behind First Hawaiian and CIB Marine Bancshares 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.