Correlation Between Pacific West and Summit Bank
Can any of the company-specific risk be diversified away by investing in both Pacific West and Summit Bank 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 Summit Bank 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 Summit Bank Group, you can compare the effects of market volatilities on Pacific West and Summit Bank 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 Summit Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific West and Summit Bank.
Diversification Opportunities for Pacific West and Summit Bank
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pacific and Summit is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pacific West Bancorp and Summit Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bank Group 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 Summit Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bank Group has no effect on the direction of Pacific West i.e., Pacific West and Summit Bank go up and down completely randomly.
Pair Corralation between Pacific West and Summit Bank
Given the investment horizon of 90 days Pacific West Bancorp is expected to generate 3.08 times more return on investment than Summit Bank. However, Pacific West is 3.08 times more volatile than Summit Bank Group. It trades about 0.03 of its potential returns per unit of risk. Summit Bank Group is currently generating about -0.31 per unit of risk. If you would invest 1,100 in Pacific West Bancorp on October 24, 2024 and sell it today you would earn a total of 10.00 from holding Pacific West Bancorp or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific West Bancorp vs. Summit Bank Group
Performance |
| Timeline |
| Pacific West Bancorp |
| Summit Bank Group |
Pacific West and Summit Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific West and Summit Bank
The main advantage of trading using opposite Pacific West and Summit Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific West position performs unexpectedly, Summit Bank 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 Summit Bank will offset losses from the drop in Summit Bank's long position.| Pacific West vs. Amkor Technology | Pacific West vs. CTS Corporation | Pacific West vs. The Mosaic | Pacific West vs. Sonos Inc |
| Summit Bank vs. Savi Financial | Summit Bank vs. Pacific West Bancorp | Summit Bank vs. Commencement Bancorp | Summit Bank vs. Merchants Marine Bancorp |
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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