Correlation Between Harbor Bankshares and Westamerica Bancorporation
Can any of the company-specific risk be diversified away by investing in both Harbor Bankshares 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 Harbor Bankshares and Westamerica Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor Bankshares and Westamerica Bancorporation, you can compare the effects of market volatilities on Harbor Bankshares 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 Harbor Bankshares with a short position of Westamerica Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Bankshares and Westamerica Bancorporation.
Diversification Opportunities for Harbor Bankshares and Westamerica Bancorporation
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harbor and Westamerica is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares and Westamerica Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westamerica Bancorporation 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 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 Harbor Bankshares i.e., Harbor Bankshares and Westamerica Bancorporation go up and down completely randomly.
Pair Corralation between Harbor Bankshares and Westamerica Bancorporation
Given the investment horizon of 90 days Harbor Bankshares is expected to generate 2.1 times more return on investment than Westamerica Bancorporation. However, Harbor Bankshares is 2.1 times more volatile than Westamerica Bancorporation. It trades about 0.07 of its potential returns per unit of risk. Westamerica Bancorporation is currently generating about 0.03 per unit of risk. If you would invest 895.00 in Harbor Bankshares on September 3, 2024 and sell it today you would earn a total of 480.00 from holding Harbor Bankshares or generate 53.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.57% |
| Values | Daily Returns |
Harbor Bankshares vs. Westamerica Bancorp.
Performance |
| Timeline |
| Harbor Bankshares |
| Westamerica Bancorporation |
Harbor Bankshares and Westamerica Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbor Bankshares and Westamerica Bancorporation
The main advantage of trading using opposite Harbor Bankshares and Westamerica Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Bankshares 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.| Harbor Bankshares vs. First Hawaiian | Harbor Bankshares vs. Central Pacific Financial | Harbor Bankshares vs. Territorial Bancorp | Harbor Bankshares vs. Comerica |
| Westamerica Bancorporation vs. Heritage Commerce Corp | Westamerica Bancorporation vs. Heritage Financial | Westamerica Bancorporation vs. Penns Woods Bancorp | Westamerica Bancorporation vs. 1st Source |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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