Correlation Between Permanent TSB and First Hawaiian

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

By analyzing existing cross correlation between Permanent TSB Group and First Hawaiian, you can compare the effects of market volatilities on Permanent TSB and First Hawaiian 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 Permanent TSB with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permanent TSB and First Hawaiian.

Diversification Opportunities for Permanent TSB and First Hawaiian

-0.65

Correlation Coefficient

Permanent TSB  First Hawaiian

Excellent diversification

The 3 months correlation between Permanent and First is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Permanent TSB Group and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Permanent TSB 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 Permanent TSB Group are associated (or correlated) with First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of Permanent TSB i.e., Permanent TSB and First Hawaiian go up and down completely randomly.

Pair Corralation between Permanent TSB and First Hawaiian

Assuming the 90 days horizon Permanent TSB Group is expected to under-perform the First Hawaiian. In addition to that, Permanent TSB is 1.13 times more volatile than First Hawaiian. It trades about -0.05 of its total potential returns per unit of risk. First Hawaiian is currently generating about 0.14 per unit of volatility. If you would invest  2,288  in First Hawaiian on September 6, 2024 and sell it today you would earn a total of  422.00  from holding First Hawaiian or generate 18.44% return on investment over 90 days.

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

Permanent TSB Group  vs.  First Hawaiian

Permanent TSB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Permanent TSB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 unsteady technical indicators, First Hawaiian sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Permanent TSB and First Hawaiian

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

The idea behind Permanent TSB Group and First Hawaiian 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.