Correlation Between First Hawaiian and Nmb Financial

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

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

Diversification Opportunities for First Hawaiian and Nmb Financial

0.81

Correlation Coefficient

First Hawaiian  Nmb Financial

Very poor diversification

The 3 months correlation between First and Nmb is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and Nmb Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nmb Financial Corp 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 Nmb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nmb Financial Corp has no effect on the direction of First Hawaiian i.e., First Hawaiian and Nmb Financial go up and down completely randomly.

Pair Corralation between First Hawaiian and Nmb Financial

Considering the 90-day investment horizon First Hawaiian is expected to generate 1.66 times less return on investment than Nmb Financial. In addition to that, First Hawaiian is 1.41 times more volatile than Nmb Financial Corp. It trades about 0.14 of its total potential returns per unit of risk. Nmb Financial Corp is currently generating about 0.33 per unit of volatility. If you would invest  1,026  in Nmb Financial Corp on September 10, 2024 and sell it today you would earn a total of  374.00  from holding Nmb Financial Corp or generate 36.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

First Hawaiian  vs.  Nmb Financial Corp

First Hawaiian

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 11 (%) 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.

Nmb Financial Corp

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nmb Financial Corp are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Nmb Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Hawaiian and Nmb Financial

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

The idea behind First Hawaiian and Nmb Financial Corp 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.