Correlation Between Oconee Financial and Westamerica Bancorporation
Can any of the company-specific risk be diversified away by investing in both Oconee Financial 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 Oconee Financial and Westamerica Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oconee Financial and Westamerica Bancorporation, you can compare the effects of market volatilities on Oconee Financial 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 Oconee Financial with a short position of Westamerica Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oconee Financial and Westamerica Bancorporation.
Diversification Opportunities for Oconee Financial and Westamerica Bancorporation
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oconee and Westamerica is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Oconee Financial and Westamerica Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westamerica Bancorporation and Oconee Financial 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 Oconee Financial 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 Oconee Financial i.e., Oconee Financial and Westamerica Bancorporation go up and down completely randomly.
Pair Corralation between Oconee Financial and Westamerica Bancorporation
Given the investment horizon of 90 days Oconee Financial is expected to generate 0.47 times more return on investment than Westamerica Bancorporation. However, Oconee Financial is 2.11 times less risky than Westamerica Bancorporation. It trades about 0.12 of its potential returns per unit of risk. Westamerica Bancorporation is currently generating about 0.03 per unit of risk. If you would invest 3,031 in Oconee Financial on September 3, 2024 and sell it today you would earn a total of 869.00 from holding Oconee Financial or generate 28.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Oconee Financial vs. Westamerica Bancorp.
Performance |
| Timeline |
| Oconee Financial |
| Westamerica Bancorporation |
Oconee Financial and Westamerica Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oconee Financial and Westamerica Bancorporation
The main advantage of trading using opposite Oconee Financial and Westamerica Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oconee Financial 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.| Oconee Financial vs. First Hawaiian | Oconee Financial vs. Central Pacific Financial | Oconee Financial vs. Territorial Bancorp | Oconee Financial vs. Comerica |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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