Correlation Between Westamerica Bancorporation and First Busey
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and First Busey 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 First Busey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and First Busey Corp, you can compare the effects of market volatilities on Westamerica Bancorporation and First Busey 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 First Busey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and First Busey.
Diversification Opportunities for Westamerica Bancorporation and First Busey
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westamerica and First is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and First Busey Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Busey Corp 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 First Busey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Busey Corp has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and First Busey go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and First Busey
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 1.09 times less return on investment than First Busey. But when comparing it to its historical volatility, Westamerica Bancorporation is 1.05 times less risky than First Busey. It trades about 0.09 of its potential returns per unit of risk. First Busey Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,204 in First Busey Corp on August 28, 2024 and sell it today you would earn a total of 551.00 from holding First Busey Corp or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. First Busey Corp
Performance |
| Timeline |
| Westamerica Bancorporation |
| First Busey Corp |
Westamerica Bancorporation and First Busey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and First Busey
The main advantage of trading using opposite Westamerica Bancorporation and First Busey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, First Busey 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 First Busey will offset losses from the drop in First Busey's long position.| Westamerica Bancorporation vs. Fifth Third Bancorp | Westamerica Bancorporation vs. Huntington Bancshares Incorporated | Westamerica Bancorporation vs. MT Bank |
| First Busey vs. Home Federal Bancorp | First Busey vs. First Financial Northwest | First Busey vs. First Northwest Bancorp | First Busey vs. First Capital |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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