Correlation Between Westamerica Bancorporation and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and Banco Santander 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 Banco Santander into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and Banco Santander Chile, you can compare the effects of market volatilities on Westamerica Bancorporation and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Banco Santander.
Diversification Opportunities for Westamerica Bancorporation and Banco Santander
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westamerica and Banco is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Banco Santander Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Chile 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander Chile has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Banco Santander go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Banco Santander
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 2.21 times more return on investment than Banco Santander. However, Westamerica Bancorporation is 2.21 times more volatile than Banco Santander Chile. It trades about 0.15 of its potential returns per unit of risk. Banco Santander Chile is currently generating about -0.18 per unit of risk. If you would invest 5,129 in Westamerica Bancorporation on August 24, 2024 and sell it today you would earn a total of 522.00 from holding Westamerica Bancorporation or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. Banco Santander Chile
Performance |
| Timeline |
| Westamerica Bancorporation |
| Banco Santander Chile |
Westamerica Bancorporation and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Banco Santander
The main advantage of trading using opposite Westamerica Bancorporation and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.| Westamerica Bancorporation vs. Heritage Commerce Corp | Westamerica Bancorporation vs. Heritage Financial | Westamerica Bancorporation vs. Penns Woods Bancorp | Westamerica Bancorporation vs. 1st Source |
| Banco Santander vs. Bancolombia SA ADR | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. Credicorp | Banco Santander vs. Banco Santander Brasil |
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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