Correlation Between First Hawaiian and Eurobank Ergasias

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

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

Diversification Opportunities for First Hawaiian and Eurobank Ergasias

-0.2

Correlation Coefficient

First Hawaiian  Eurobank Ergasias

Good diversification

The 3 months correlation between First and Eurobank is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Eurobank Ergasias SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias 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 Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of First Hawaiian i.e., First Hawaiian and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between First Hawaiian and Eurobank Ergasias

Considering the 90-day investment horizon First Hawaiian is expected to under-perform the Eurobank Ergasias. But the stock apears to be less risky and, when comparing its historical volatility, First Hawaiian is 2.33 times less risky than Eurobank Ergasias. The stock trades about -0.06 of its potential returns per unit of risk. The Eurobank Ergasias SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Eurobank Ergasias SA on December 28, 2024 and sell it today you would earn a total of  38.00  from holding Eurobank Ergasias SA or generate 34.86% return on investment over 90 days.

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

First Hawaiian  vs.  Eurobank Ergasias SA

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.

Eurobank Ergasias

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Eurobank Ergasias showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Hawaiian and Eurobank Ergasias

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

The idea behind First Hawaiian and Eurobank Ergasias SA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.