Correlation Between Smith Midland and PacWest Bancorp
Can any of the company-specific risk be diversified away by investing in both Smith Midland and PacWest Bancorp 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 Smith Midland and PacWest Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Midland Corp and PacWest Bancorp, you can compare the effects of market volatilities on Smith Midland and PacWest Bancorp 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 Smith Midland with a short position of PacWest Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Midland and PacWest Bancorp.
Diversification Opportunities for Smith Midland and PacWest Bancorp
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Smith and PacWest is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Smith Midland Corp and PacWest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacWest Bancorp and Smith Midland 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 Smith Midland Corp are associated (or correlated) with PacWest Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacWest Bancorp has no effect on the direction of Smith Midland i.e., Smith Midland and PacWest Bancorp go up and down completely randomly.
Pair Corralation between Smith Midland and PacWest Bancorp
If you would invest 3,417 in Smith Midland Corp on November 1, 2024 and sell it today you would earn a total of 641.00 from holding Smith Midland Corp or generate 18.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 1.67% |
| Values | Daily Returns |
Smith Midland Corp vs. PacWest Bancorp
Performance |
| Timeline |
| Smith Midland Corp |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Smith Midland and PacWest Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Midland and PacWest Bancorp
The main advantage of trading using opposite Smith Midland and PacWest Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Midland position performs unexpectedly, PacWest Bancorp 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 PacWest Bancorp will offset losses from the drop in PacWest Bancorp's long position.| Smith Midland vs. United States Lime | Smith Midland vs. Holcim | Smith Midland vs. Lafargeholcim Ltd ADR | Smith Midland vs. Cementos Pacasmayo SAA |
| PacWest Bancorp vs. Western Alliance Bancorporation | PacWest Bancorp vs. Midland States Bancorp | PacWest Bancorp vs. Wintrust Financial Corp | PacWest Bancorp vs. Bank Ozk Preferred |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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