Correlation Between Nedbank and First Hawaiian
Can any of the company-specific risk be diversified away by investing in both Nedbank 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 Nedbank and First Hawaiian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nedbank Group and First Hawaiian, you can compare the effects of market volatilities on Nedbank 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 Nedbank with a short position of First Hawaiian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nedbank and First Hawaiian.
Diversification Opportunities for Nedbank and First Hawaiian
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nedbank and First is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nedbank Group and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Nedbank 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 Nedbank 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 Nedbank i.e., Nedbank and First Hawaiian go up and down completely randomly.
Pair Corralation between Nedbank and First Hawaiian
Assuming the 90 days horizon Nedbank is expected to generate 4.01 times less return on investment than First Hawaiian. But when comparing it to its historical volatility, Nedbank Group is 1.45 times less risky than First Hawaiian. It trades about 0.05 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,303 in First Hawaiian on September 7, 2024 and sell it today you would earn a total of 433.00 from holding First Hawaiian or generate 18.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nedbank Group vs. First Hawaiian
Performance |
Timeline |
Nedbank Group |
First Hawaiian |
Nedbank and First Hawaiian Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nedbank and First Hawaiian
The main advantage of trading using opposite Nedbank and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nedbank 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.Nedbank vs. Katahdin Bankshares Corp | Nedbank vs. Marquette National Corp | Nedbank vs. United Bancorporation of | Nedbank vs. Fentura Financial |
First Hawaiian vs. Territorial Bancorp | First Hawaiian vs. Bank of Hawaii | First Hawaiian vs. Financial Institutions | First Hawaiian vs. Heritage Financial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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