Correlation Between Harbor Bankshares and PacWest Bancorp
Can any of the company-specific risk be diversified away by investing in both Harbor Bankshares 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 Harbor Bankshares and PacWest Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor Bankshares and PacWest Bancorp, you can compare the effects of market volatilities on Harbor Bankshares 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 Harbor Bankshares with a short position of PacWest Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Bankshares and PacWest Bancorp.
Diversification Opportunities for Harbor Bankshares and PacWest Bancorp
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Harbor and PacWest is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares and PacWest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacWest Bancorp and Harbor Bankshares 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 Harbor Bankshares 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 Harbor Bankshares i.e., Harbor Bankshares and PacWest Bancorp go up and down completely randomly.
Pair Corralation between Harbor Bankshares and PacWest Bancorp
Given the investment horizon of 90 days Harbor Bankshares is expected to under-perform the PacWest Bancorp. In addition to that, Harbor Bankshares is 1.02 times more volatile than PacWest Bancorp. It trades about -0.01 of its total potential returns per unit of risk. PacWest Bancorp is currently generating about 0.18 per unit of volatility. If you would invest 853.00 in PacWest Bancorp on September 1, 2024 and sell it today you would earn a total of 201.00 from holding PacWest Bancorp or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 11.27% |
| Values | Daily Returns |
Harbor Bankshares vs. PacWest Bancorp
Performance |
| Timeline |
| Harbor Bankshares |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Harbor Bankshares and PacWest Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbor Bankshares and PacWest Bancorp
The main advantage of trading using opposite Harbor Bankshares and PacWest Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Bankshares 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.| Harbor Bankshares vs. MNB Holdings Corp | Harbor Bankshares vs. Oconee Financial | Harbor Bankshares vs. Mission Valley Bancorp | Harbor Bankshares vs. Merchants Marine Bancorp |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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