Correlation Between First Horizon and PacWest Bancorp
Can any of the company-specific risk be diversified away by investing in both First Horizon and PacWest Bancorp 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 First Horizon and PacWest Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon National and PacWest Bancorp, you can compare the effects of market volatilities on First Horizon and PacWest Bancorp 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 First Horizon with a short position of PacWest Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and PacWest Bancorp.
Diversification Opportunities for First Horizon and PacWest Bancorp
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and PacWest is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon National and PacWest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacWest Bancorp and First Horizon 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 First Horizon National are associated (or correlated) with PacWest Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacWest Bancorp has no effect on the direction of First Horizon i.e., First Horizon and PacWest Bancorp go up and down completely randomly.
Pair Corralation between First Horizon and PacWest Bancorp
Considering the 90-day investment horizon First Horizon is expected to generate 3.26 times less return on investment than PacWest Bancorp. But when comparing it to its historical volatility, First Horizon National is 3.96 times less risky than PacWest Bancorp. It trades about 0.01 of its potential returns per unit of risk. PacWest Bancorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,371 in PacWest Bancorp on August 27, 2024 and sell it today you would lose (1,317) from holding PacWest Bancorp or give up 55.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.85% |
| Values | Daily Returns |
First Horizon National vs. PacWest Bancorp
Performance |
| Timeline |
| First Horizon National |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
First Horizon and PacWest Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and PacWest Bancorp
The main advantage of trading using opposite First Horizon and PacWest Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon position performs unexpectedly, PacWest Bancorp 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 PacWest Bancorp will offset losses from the drop in PacWest Bancorp's long position.| First Horizon vs. Zions Bancorporation | First Horizon vs. KeyCorp | First Horizon vs. Comerica | First Horizon vs. Western Alliance Bancorporation |
| PacWest Bancorp vs. Zions Bancorporation | PacWest Bancorp vs. KeyCorp | PacWest Bancorp vs. Comerica | PacWest Bancorp vs. First Horizon National |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |