Correlation Between First Hawaiian and Mifflinburg Bancorp

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

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

Diversification Opportunities for First Hawaiian and Mifflinburg Bancorp

-0.3

Correlation Coefficient

First Hawaiian  Mifflinburg Bancorp

Very good diversification

The 3 months correlation between First and Mifflinburg is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Mifflinburg Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mifflinburg Bancorp 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 Mifflinburg Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mifflinburg Bancorp has no effect on the direction of First Hawaiian i.e., First Hawaiian and Mifflinburg Bancorp go up and down completely randomly.

Pair Corralation between First Hawaiian and Mifflinburg Bancorp

Considering the 90-day investment horizon First Hawaiian is expected to generate 29.92 times less return on investment than Mifflinburg Bancorp. But when comparing it to its historical volatility, First Hawaiian is 2.13 times less risky than Mifflinburg Bancorp. It trades about 0.01 of its potential returns per unit of risk. Mifflinburg Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,316  in Mifflinburg Bancorp on September 12, 2024 and sell it today you would earn a total of  69.00  from holding Mifflinburg Bancorp or generate 2.98% 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.  Mifflinburg Bancorp

First Hawaiian

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical indicators, First Hawaiian sustained solid returns over the last few months and may actually be approaching a breakup point.

Mifflinburg Bancorp

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with First Hawaiian and Mifflinburg Bancorp

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

The idea behind First Hawaiian and Mifflinburg Bancorp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.