Correlation Between First Bancorp and First Hawaiian

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

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

Diversification Opportunities for First Bancorp and First Hawaiian

0.8

Correlation Coefficient

First Bancorp  First Hawaiian

Very poor diversification

The 3 months correlation between First and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding First Bancorp and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and First 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 First Bancorp 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 First Bancorp i.e., First Bancorp and First Hawaiian go up and down completely randomly.

Pair Corralation between First Bancorp and First Hawaiian

Given the investment horizon of 90 days First Bancorp is expected to under-perform the First Hawaiian. In addition to that, First Bancorp is 1.18 times more volatile than First Hawaiian. It trades about -0.04 of its total potential returns per unit of risk. First Hawaiian is currently generating about 0.02 per unit of volatility. If you would invest  2,530  in First Hawaiian on September 10, 2025 and sell it today you would earn a total of  24.00  from holding First Hawaiian or generate 0.95% return on investment over 90 days.

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

First Bancorp  vs.  First Hawaiian

First Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days First Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, First Bancorp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

First Hawaiian

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, First Hawaiian is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Bancorp and First Hawaiian

The main advantage of trading using opposite First Bancorp and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancorp 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 First Bancorp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.