Correlation Between Veritex Holdings and First Hawaiian

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

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

Diversification Opportunities for Veritex Holdings and First Hawaiian

0.94

Correlation Coefficient

Veritex Holdings  First Hawaiian

Almost no diversification

The 3 months correlation between Veritex and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Veritex Holdings and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian and Veritex Holdings 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 Veritex Holdings 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 Veritex Holdings i.e., Veritex Holdings and First Hawaiian go up and down completely randomly.

Pair Corralation between Veritex Holdings and First Hawaiian

Given the investment horizon of 90 days Veritex Holdings is expected to generate 1.12 times more return on investment than First Hawaiian. However, Veritex Holdings is 1.12 times more volatile than First Hawaiian. It trades about 0.46 of its potential returns per unit of risk. First Hawaiian is currently generating about 0.3 per unit of risk. If you would invest  2,129  in Veritex Holdings on February 15, 2025 and sell it today you would earn a total of  383.00  from holding Veritex Holdings or generate 17.99% return on investment over 90 days.

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

Veritex Holdings  vs.  First Hawaiian

Veritex Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Veritex Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Veritex Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

First Hawaiian

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Hawaiian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Veritex Holdings and First Hawaiian

The main advantage of trading using opposite Veritex Holdings and First Hawaiian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veritex Holdings 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 Veritex Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.