Correlation Between Alpha Bank and Western Alliance
Can any of the company-specific risk be diversified away by investing in both Alpha Bank and Western Alliance 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 Alpha Bank and Western Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpha Bank SA and Western Alliance Bancorporation, you can compare the effects of market volatilities on Alpha Bank and Western Alliance 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 Alpha Bank with a short position of Western Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Bank and Western Alliance.
Diversification Opportunities for Alpha Bank and Western Alliance
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alpha and Western is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Bank SA and Western Alliance Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alliance Ban and Alpha Bank 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 Alpha Bank SA are associated (or correlated) with Western Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alliance Ban has no effect on the direction of Alpha Bank i.e., Alpha Bank and Western Alliance go up and down completely randomly.
Pair Corralation between Alpha Bank and Western Alliance
Assuming the 90 days horizon Alpha Bank is expected to generate 1.18 times less return on investment than Western Alliance. But when comparing it to its historical volatility, Alpha Bank SA is 1.1 times less risky than Western Alliance. It trades about 0.04 of its potential returns per unit of risk. Western Alliance Bancorporation is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,901 in Western Alliance Bancorporation on August 26, 2024 and sell it today you would earn a total of 3,464 from holding Western Alliance Bancorporation or generate 58.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alpha Bank SA vs. Western Alliance Bancorp.
Performance |
| Timeline |
| Alpha Bank SA |
| Western Alliance Ban |
Alpha Bank and Western Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha Bank and Western Alliance
The main advantage of trading using opposite Alpha Bank and Western Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Bank position performs unexpectedly, Western Alliance 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 Western Alliance will offset losses from the drop in Western Alliance's long position.| Alpha Bank vs. National Bank of | Alpha Bank vs. Piraeus Bank SA | Alpha Bank vs. Eurobank Ergasias SA | Alpha Bank vs. First Citizens BancShares |
| Western Alliance vs. Zions Bancorporation | Western Alliance vs. KeyCorp | Western Alliance vs. First Horizon National | Western Alliance vs. Comerica |
Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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