Correlation Between Commerce Bancshares and Westamerica Bancorporation
Can any of the company-specific risk be diversified away by investing in both Commerce Bancshares and Westamerica Bancorporation 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 Commerce Bancshares and Westamerica Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerce Bancshares and Westamerica Bancorporation, you can compare the effects of market volatilities on Commerce Bancshares and Westamerica Bancorporation 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 Commerce Bancshares with a short position of Westamerica Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Bancshares and Westamerica Bancorporation.
Diversification Opportunities for Commerce Bancshares and Westamerica Bancorporation
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Commerce and Westamerica is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Bancshares and Westamerica Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westamerica Bancorporation and Commerce Bancshares 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 Commerce Bancshares are associated (or correlated) with Westamerica Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westamerica Bancorporation has no effect on the direction of Commerce Bancshares i.e., Commerce Bancshares and Westamerica Bancorporation go up and down completely randomly.
Pair Corralation between Commerce Bancshares and Westamerica Bancorporation
Given the investment horizon of 90 days Commerce Bancshares is expected to generate 0.78 times more return on investment than Westamerica Bancorporation. However, Commerce Bancshares is 1.29 times less risky than Westamerica Bancorporation. It trades about 0.14 of its potential returns per unit of risk. Westamerica Bancorporation is currently generating about 0.07 per unit of risk. If you would invest 6,289 in Commerce Bancshares on October 20, 2024 and sell it today you would earn a total of 196.00 from holding Commerce Bancshares or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerce Bancshares vs. Westamerica Bancorp.
Performance |
| Timeline |
| Commerce Bancshares |
| Westamerica Bancorporation |
Commerce Bancshares and Westamerica Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerce Bancshares and Westamerica Bancorporation
The main advantage of trading using opposite Commerce Bancshares and Westamerica Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Bancshares position performs unexpectedly, Westamerica Bancorporation 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 Westamerica Bancorporation will offset losses from the drop in Westamerica Bancorporation's long position.| Commerce Bancshares vs. BOK Financial | Commerce Bancshares vs. Texas Capital Bancshares | Commerce Bancshares vs. United Bankshares | Commerce Bancshares vs. Prosperity Bancshares |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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