Correlation Between Tectonic Financial and Westamerica Bancorporation
Can any of the company-specific risk be diversified away by investing in both Tectonic 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 Tectonic 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 Tectonic Financial PR and Westamerica Bancorporation, you can compare the effects of market volatilities on Tectonic 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 Tectonic Financial with a short position of Westamerica Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Westamerica Bancorporation.
Diversification Opportunities for Tectonic Financial and Westamerica Bancorporation
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tectonic and Westamerica is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Westamerica Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westamerica Bancorporation and Tectonic 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 Tectonic Financial PR 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 Tectonic Financial i.e., Tectonic Financial and Westamerica Bancorporation go up and down completely randomly.
Pair Corralation between Tectonic Financial and Westamerica Bancorporation
Assuming the 90 days horizon Tectonic Financial PR is expected to generate 0.66 times more return on investment than Westamerica Bancorporation. However, Tectonic Financial PR is 1.51 times less risky than Westamerica Bancorporation. It trades about 0.04 of its potential returns per unit of risk. Westamerica Bancorporation is currently generating about 0.02 per unit of risk. If you would invest 852.00 in Tectonic Financial PR on August 30, 2024 and sell it today you would earn a total of 183.00 from holding Tectonic Financial PR or generate 21.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. Westamerica Bancorp.
Performance |
| Timeline |
| Tectonic Financial |
| Westamerica Bancorporation |
Tectonic Financial and Westamerica Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Westamerica Bancorporation
The main advantage of trading using opposite Tectonic Financial and Westamerica Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic 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.| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
| Westamerica Bancorporation vs. SVB T Corp | Westamerica Bancorporation vs. First Capital | Westamerica Bancorporation vs. Pioneer Bankcorp | Westamerica Bancorporation vs. Liberty Northwest 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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