Correlation Between Westamerica Bancorporation and Cadence Bank
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and Cadence Bank 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 Cadence Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and Cadence Bank, you can compare the effects of market volatilities on Westamerica Bancorporation and Cadence Bank 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 Cadence Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Cadence Bank.
Diversification Opportunities for Westamerica Bancorporation and Cadence Bank
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westamerica and Cadence is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Cadence Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bank 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 Cadence Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bank has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Cadence Bank go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Cadence Bank
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 3.01 times more return on investment than Cadence Bank. However, Westamerica Bancorporation is 3.01 times more volatile than Cadence Bank. It trades about 0.19 of its potential returns per unit of risk. Cadence Bank is currently generating about -0.17 per unit of risk. If you would invest 5,108 in Westamerica Bancorporation on September 1, 2024 and sell it today you would earn a total of 615.00 from holding Westamerica Bancorporation or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Westamerica Bancorp. vs. Cadence Bank
Performance |
| Timeline |
| Westamerica Bancorporation |
| Cadence Bank |
Westamerica Bancorporation and Cadence Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Cadence Bank
The main advantage of trading using opposite Westamerica Bancorporation and Cadence Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, Cadence Bank 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 Cadence Bank will offset losses from the drop in Cadence Bank'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 |
| Cadence Bank vs. Bank of Hawaii | Cadence Bank vs. Associated Banc Corp | Cadence Bank vs. Citizens Financial Group | Cadence Bank vs. CullenFrost Bankers |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |