Correlation Between Summit Bank and Pacific West
Can any of the company-specific risk be diversified away by investing in both Summit Bank and Pacific West 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 Summit Bank and Pacific West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bank Group and Pacific West Bancorp, you can compare the effects of market volatilities on Summit Bank and Pacific West 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 Summit Bank with a short position of Pacific West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bank and Pacific West.
Diversification Opportunities for Summit Bank and Pacific West
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Pacific is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bank Group and Pacific West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific West Bancorp and Summit 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 Summit Bank Group are associated (or correlated) with Pacific West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific West Bancorp has no effect on the direction of Summit Bank i.e., Summit Bank and Pacific West go up and down completely randomly.
Pair Corralation between Summit Bank and Pacific West
Given the investment horizon of 90 days Summit Bank Group is expected to generate 1.47 times more return on investment than Pacific West. However, Summit Bank is 1.47 times more volatile than Pacific West Bancorp. It trades about 0.02 of its potential returns per unit of risk. Pacific West Bancorp is currently generating about -0.07 per unit of risk. If you would invest 1,430 in Summit Bank Group on October 11, 2024 and sell it today you would lose (20.00) from holding Summit Bank Group or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Bank Group vs. Pacific West Bancorp
Performance |
| Timeline |
| Summit Bank Group |
| Pacific West Bancorp |
Summit Bank and Pacific West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bank and Pacific West
The main advantage of trading using opposite Summit Bank and Pacific West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bank position performs unexpectedly, Pacific West 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 Pacific West will offset losses from the drop in Pacific West's long position.| Summit Bank vs. Savi Financial | Summit Bank vs. Pacific West Bancorp | Summit Bank vs. Commencement Bancorp | Summit Bank vs. Merchants Marine Bancorp |
| Pacific West vs. XCPCNL Business Services | Pacific West vs. International Consolidated Companies | Pacific West vs. Mills Music Trust | Pacific West vs. Citrine Global Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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