Correlation Between Bank of Hawaii and Zions Bancorporation

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

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

Diversification Opportunities for Bank of Hawaii and Zions Bancorporation

-0.77

Correlation Coefficient

Bank of Hawaii  Zions Bancorporation

Pay attention - limited upside

The 3 months correlation between Bank and Zions is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Hawaii and Zions Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation and Bank of Hawaii 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 Bank of Hawaii are associated (or correlated) with Zions Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zions Bancorporation has no effect on the direction of Bank of Hawaii i.e., Bank of Hawaii and Zions Bancorporation go up and down completely randomly.

Pair Corralation between Bank of Hawaii and Zions Bancorporation

Assuming the 90 days trading horizon Bank of Hawaii is expected to under-perform the Zions Bancorporation. But the preferred stock apears to be less risky and, when comparing its historical volatility, Bank of Hawaii is 2.54 times less risky than Zions Bancorporation. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Zions Bancorporation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,695  in Zions Bancorporation on September 4, 2024 and sell it today you would earn a total of  1,297  from holding Zions Bancorporation or generate 27.63% return on investment over 90 days.

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

Bank of Hawaii  vs.  Zions Bancorp.

Bank of Hawaii

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zions Bancorporation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zions Bancorporation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Zions Bancorporation displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank of Hawaii and Zions Bancorporation

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

The idea behind Bank of Hawaii and Zions Bancorporation 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.