Correlation Between First Hawaiian and Bank Hapoalim

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

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

Diversification Opportunities for First Hawaiian and Bank Hapoalim

0.89

Correlation Coefficient

First Hawaiian  Bank Hapoalim

Very poor diversification

The 3 months correlation between First and Bank is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Bank Hapoalim ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim ADR 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 Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim ADR has no effect on the direction of First Hawaiian i.e., First Hawaiian and Bank Hapoalim go up and down completely randomly.

Pair Corralation between First Hawaiian and Bank Hapoalim

Considering the 90-day investment horizon First Hawaiian is expected to generate 0.78 times more return on investment than Bank Hapoalim. However, First Hawaiian is 1.28 times less risky than Bank Hapoalim. It trades about 0.15 of its potential returns per unit of risk. Bank Hapoalim ADR is currently generating about 0.11 per unit of risk. If you would invest  1,938  in First Hawaiian on September 6, 2024 and sell it today you would earn a total of  772.00  from holding First Hawaiian or generate 39.83% return on investment over 90 days.

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

First Hawaiian  vs.  Bank Hapoalim ADR

First Hawaiian

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 10 (%) 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.

Bank Hapoalim ADR

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with First Hawaiian and Bank Hapoalim

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

The idea behind First Hawaiian and Bank Hapoalim ADR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.