Correlation Between Equity Bancshares, and West Bancorporation
Can any of the company-specific risk be diversified away by investing in both Equity Bancshares, and West 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 Equity Bancshares, and West Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Bancshares, and West Bancorporation, you can compare the effects of market volatilities on Equity Bancshares, and West 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 Equity Bancshares, with a short position of West Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Bancshares, and West Bancorporation.
Diversification Opportunities for Equity Bancshares, and West Bancorporation
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Equity and West is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Equity Bancshares, and West Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Bancorporation and Equity 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 Equity Bancshares, are associated (or correlated) with West Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Bancorporation has no effect on the direction of Equity Bancshares, i.e., Equity Bancshares, and West Bancorporation go up and down completely randomly.
Pair Corralation between Equity Bancshares, and West Bancorporation
Given the investment horizon of 90 days Equity Bancshares, is expected to generate 0.93 times more return on investment than West Bancorporation. However, Equity Bancshares, is 1.07 times less risky than West Bancorporation. It trades about 0.04 of its potential returns per unit of risk. West Bancorporation is currently generating about 0.02 per unit of risk. If you would invest 3,395 in Equity Bancshares, on September 3, 2024 and sell it today you would earn a total of 1,476 from holding Equity Bancshares, or generate 43.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Bancshares, vs. West Bancorp.
Performance |
| Timeline |
| Equity Bancshares, |
| West Bancorporation |
Equity Bancshares, and West Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Bancshares, and West Bancorporation
The main advantage of trading using opposite Equity Bancshares, and West Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Bancshares, position performs unexpectedly, West 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 West Bancorporation will offset losses from the drop in West Bancorporation's long position.| Equity Bancshares, vs. Brookline Bancorp | Equity Bancshares, vs. Kearny Financial Corp | Equity Bancshares, vs. Heritage Financial | Equity Bancshares, vs. FVCBankcorp |
| West Bancorporation vs. JPMorgan Chase Co | West Bancorporation vs. Citigroup | West Bancorporation vs. Wells Fargo | West Bancorporation vs. Toronto Dominion Bank |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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