Correlation Between National Bank and Westamerica Bancorporation
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Westamerica Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Westamerica Bancorporation, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Westamerica Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Westamerica Bancorporation.
Diversification Opportunities for National Bank and Westamerica Bancorporation
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Westamerica is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Westamerica Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westamerica Bancorporation and National Bank 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 National Bank Holdings 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 National Bank i.e., National Bank and Westamerica Bancorporation go up and down completely randomly.
Pair Corralation between National Bank and Westamerica Bancorporation
Given the investment horizon of 90 days National Bank Holdings is expected to generate 1.03 times more return on investment than Westamerica Bancorporation. However, National Bank is 1.03 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 -0.13 per unit of risk. If you would invest 4,264 in National Bank Holdings on November 28, 2024 and sell it today you would lose (86.00) from holding National Bank Holdings or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Westamerica Bancorp.
Performance |
| Timeline |
| National Bank Holdings |
| Westamerica Bancorporation |
National Bank and Westamerica Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Westamerica Bancorporation
The main advantage of trading using opposite National Bank and Westamerica Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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