Correlation Between Nmb Financial and First Hawaiian

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

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

Diversification Opportunities for Nmb Financial and First Hawaiian

0.75

Correlation Coefficient

Nmb Financial  First Hawaiian

Poor diversification

The 3 months correlation between Nmb and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nmb Financial Corp and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Nmb Financial 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 Nmb Financial Corp 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 Nmb Financial i.e., Nmb Financial and First Hawaiian go up and down completely randomly.

Pair Corralation between Nmb Financial and First Hawaiian

Given the investment horizon of 90 days Nmb Financial Corp is expected to generate 0.71 times more return on investment than First Hawaiian. However, Nmb Financial Corp is 1.41 times less risky than First Hawaiian. It trades about 0.33 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.12 per unit of risk. If you would invest  1,026  in Nmb Financial Corp on September 5, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Nmb Financial Corp  vs.  First Hawaiian

Nmb Financial Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nmb Financial Corp are ranked lower than 26 (%) 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.

First Hawaiian

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 9 (%) 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.

Pair Trading with Nmb Financial and First Hawaiian

The main advantage of trading using opposite Nmb Financial and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nmb Financial 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 Nmb Financial Corp 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.