Correlation Between Westamerica Bancorporation and Affinity Bancshares
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and Affinity Bancshares 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 Westamerica Bancorporation and Affinity Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and Affinity Bancshares, you can compare the effects of market volatilities on Westamerica Bancorporation and Affinity Bancshares 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 Westamerica Bancorporation with a short position of Affinity Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Affinity Bancshares.
Diversification Opportunities for Westamerica Bancorporation and Affinity Bancshares
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Westamerica and Affinity is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Affinity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Bancshares and Westamerica Bancorporation 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 Westamerica Bancorporation are associated (or correlated) with Affinity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Bancshares has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Affinity Bancshares go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Affinity Bancshares
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 3.9 times more return on investment than Affinity Bancshares. However, Westamerica Bancorporation is 3.9 times more volatile than Affinity Bancshares. It trades about 0.16 of its potential returns per unit of risk. Affinity Bancshares is currently generating about 0.04 per unit of risk. If you would invest 4,900 in Westamerica Bancorporation on August 30, 2024 and sell it today you would earn a total of 854.00 from holding Westamerica Bancorporation or generate 17.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Westamerica Bancorp. vs. Affinity Bancshares
Performance |
| Timeline |
| Westamerica Bancorporation |
| Affinity Bancshares |
Westamerica Bancorporation and Affinity Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Affinity Bancshares
The main advantage of trading using opposite Westamerica Bancorporation and Affinity Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, Affinity Bancshares 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 Affinity Bancshares will offset losses from the drop in Affinity Bancshares' long position.| Westamerica Bancorporation vs. SVB T Corp | Westamerica Bancorporation vs. First Capital | Westamerica Bancorporation vs. Pioneer Bankcorp | Westamerica Bancorporation vs. Liberty Northwest Bancorp |
| Affinity Bancshares vs. SVB T Corp | Affinity Bancshares vs. First Capital | Affinity Bancshares vs. Pioneer Bankcorp | Affinity Bancshares 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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