Correlation Between Alpha Bank and Washington Trust
Can any of the company-specific risk be diversified away by investing in both Alpha Bank and Washington Trust 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 Washington Trust 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 Washington Trust Bancorp, you can compare the effects of market volatilities on Alpha Bank and Washington Trust 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 Washington Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Bank and Washington Trust.
Diversification Opportunities for Alpha Bank and Washington Trust
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alpha and Washington is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Bank SA and Washington Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Trust Bancorp 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 Washington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Trust Bancorp has no effect on the direction of Alpha Bank i.e., Alpha Bank and Washington Trust go up and down completely randomly.
Pair Corralation between Alpha Bank and Washington Trust
Assuming the 90 days horizon Alpha Bank SA is expected to generate 1.6 times more return on investment than Washington Trust. However, Alpha Bank is 1.6 times more volatile than Washington Trust Bancorp. It trades about 0.03 of its potential returns per unit of risk. Washington Trust Bancorp is currently generating about -0.01 per unit of risk. If you would invest 30.00 in Alpha Bank SA on October 14, 2024 and sell it today you would earn a total of 10.00 from holding Alpha Bank SA or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alpha Bank SA vs. Washington Trust Bancorp
Performance |
| Timeline |
| Alpha Bank SA |
| Washington Trust Bancorp |
Alpha Bank and Washington Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha Bank and Washington Trust
The main advantage of trading using opposite Alpha Bank and Washington Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Bank position performs unexpectedly, Washington Trust 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 Washington Trust will offset losses from the drop in Washington Trust'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 |
| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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