Correlation Between Pacific West and Imax Corp
Can any of the company-specific risk be diversified away by investing in both Pacific West and Imax Corp 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 Pacific West and Imax Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific West Bancorp and Imax Corp, you can compare the effects of market volatilities on Pacific West and Imax Corp 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 Pacific West with a short position of Imax Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific West and Imax Corp.
Diversification Opportunities for Pacific West and Imax Corp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacific and Imax is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pacific West Bancorp and Imax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imax Corp and Pacific West 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 Pacific West Bancorp are associated (or correlated) with Imax Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imax Corp has no effect on the direction of Pacific West i.e., Pacific West and Imax Corp go up and down completely randomly.
Pair Corralation between Pacific West and Imax Corp
Given the investment horizon of 90 days Pacific West Bancorp is expected to under-perform the Imax Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pacific West Bancorp is 1.09 times less risky than Imax Corp. The pink sheet trades about -0.31 of its potential returns per unit of risk. The Imax Corp is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 2,509 in Imax Corp on October 28, 2024 and sell it today you would lose (154.00) from holding Imax Corp or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific West Bancorp vs. Imax Corp
Performance |
| Timeline |
| Pacific West Bancorp |
| Imax Corp |
Pacific West and Imax Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific West and Imax Corp
The main advantage of trading using opposite Pacific West and Imax Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific West position performs unexpectedly, Imax Corp 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 Imax Corp will offset losses from the drop in Imax Corp's long position.| Pacific West vs. Arm Holdings plc | Pacific West vs. Entegris | Pacific West vs. American Hotel Income | Pacific West vs. Park Hotels Resorts |
| Imax Corp vs. Marcus | Imax Corp vs. Dave Busters Entertainment | Imax Corp vs. AMC Networks | Imax Corp vs. News Corp A |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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