Correlation Between Territorial Bancorp and Crédit Agricole

Can any of the company-specific risk be diversified away by investing in both Territorial Bancorp and Crédit Agricole 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 Territorial Bancorp and Crédit Agricole into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Territorial Bancorp and Crdit Agricole SA, you can compare the effects of market volatilities on Territorial Bancorp and Crédit Agricole 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 Territorial Bancorp with a short position of Crédit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Territorial Bancorp and Crédit Agricole.

Diversification Opportunities for Territorial Bancorp and Crédit Agricole

-0.56

Correlation Coefficient

Territorial Bancorp  Crédit Agricole

Excellent diversification

The 3 months correlation between Territorial and Crédit is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Territorial Bancorp and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA and Territorial Bancorp 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 Territorial Bancorp are associated (or correlated) with Crédit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of Territorial Bancorp i.e., Territorial Bancorp and Crédit Agricole go up and down completely randomly.

Pair Corralation between Territorial Bancorp and Crédit Agricole

Given the investment horizon of 90 days Territorial Bancorp is expected to under-perform the Crédit Agricole. But the stock apears to be less risky and, when comparing its historical volatility, Territorial Bancorp is 1.26 times less risky than Crédit Agricole. The stock trades about -0.03 of its potential returns per unit of risk. The Crdit Agricole SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  842.00  in Crdit Agricole SA on September 7, 2024 and sell it today you would earn a total of  517.00  from holding Crdit Agricole SA or generate 61.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.52%
Values	Daily Returns

Territorial Bancorp  vs.  Crdit Agricole SA

Territorial Bancorp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Territorial Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Territorial Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Crdit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Territorial Bancorp and Crédit Agricole

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

The idea behind Territorial Bancorp and Crdit Agricole SA 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 Global Correlations module to find global opportunities by holding instruments from different markets.