Correlation Between Bank of Hawaii and Provident Financial

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

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

Diversification Opportunities for Bank of Hawaii and Provident Financial

0.65

Correlation Coefficient

Bank of Hawaii  Provident Financial

Poor diversification

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

Pair Corralation between Bank of Hawaii and Provident Financial

Considering the 90-day investment horizon Bank of Hawaii is expected to generate 160.2 times less return on investment than Provident Financial. But when comparing it to its historical volatility, Bank of Hawaii is 1.22 times less risky than Provident Financial. It trades about 0.0 of its potential returns per unit of risk. Provident Financial Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,974  in Provident Financial Services on September 11, 2025 and sell it today you would earn a total of  82.50  from holding Provident Financial Services or generate 4.18% return on investment over 90 days.

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

Bank of Hawaii  vs.  Provident Financial Services

Bank of Hawaii

Risk-Adjusted Performance

Weakest

Over the last 90 days Bank of Hawaii has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Bank of Hawaii is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Provident Financial

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Provident Financial Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Provident Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank of Hawaii and Provident Financial

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

The idea behind Bank of Hawaii and Provident Financial Services 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.