Correlation Between First Interstate and Bank of Hawaii

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

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

Diversification Opportunities for First Interstate and Bank of Hawaii

0.75

Correlation Coefficient

First Interstate  Bank of Hawaii

Poor diversification

The 3 months correlation between First and Bank is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Interstate BancSystem and Bank of Hawaii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Hawaii and First Interstate 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 Interstate BancSystem are associated (or correlated) with Bank of Hawaii. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Hawaii has no effect on the direction of First Interstate i.e., First Interstate and Bank of Hawaii go up and down completely randomly.

Pair Corralation between First Interstate and Bank of Hawaii

Given the investment horizon of 90 days First Interstate BancSystem is expected to generate 1.52 times more return on investment than Bank of Hawaii. However, First Interstate is 1.52 times more volatile than Bank of Hawaii. It trades about -0.09 of its potential returns per unit of risk. Bank of Hawaii is currently generating about -0.17 per unit of risk. If you would invest  3,273  in First Interstate BancSystem on July 23, 2025 and sell it today you would lose (161.00) from holding First Interstate BancSystem or give up 4.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

First Interstate BancSystem  vs.  Bank of Hawaii

First Interstate Ban

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Interstate BancSystem are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, First Interstate is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

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 latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with First Interstate and Bank of Hawaii

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

The idea behind First Interstate BancSystem and Bank of Hawaii 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.