Correlation Between Westamerica Bancorporation and CullenFrost Bankers
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and CullenFrost Bankers 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 CullenFrost Bankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and CullenFrost Bankers, you can compare the effects of market volatilities on Westamerica Bancorporation and CullenFrost Bankers 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 CullenFrost Bankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and CullenFrost Bankers.
Diversification Opportunities for Westamerica Bancorporation and CullenFrost Bankers
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westamerica and CullenFrost is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CullenFrost Bankers 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 CullenFrost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CullenFrost Bankers has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and CullenFrost Bankers go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and CullenFrost Bankers
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 2.3 times more return on investment than CullenFrost Bankers. However, Westamerica Bancorporation is 2.3 times more volatile than CullenFrost Bankers. It trades about 0.09 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about 0.08 per unit of risk. If you would invest 4,695 in Westamerica Bancorporation on September 1, 2024 and sell it today you would earn a total of 1,028 from holding Westamerica Bancorporation or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Westamerica Bancorp. vs. CullenFrost Bankers
Performance |
| Timeline |
| Westamerica Bancorporation |
| CullenFrost Bankers |
Westamerica Bancorporation and CullenFrost Bankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and CullenFrost Bankers
The main advantage of trading using opposite Westamerica Bancorporation and CullenFrost Bankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, CullenFrost Bankers 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 CullenFrost Bankers will offset losses from the drop in CullenFrost Bankers' long position.| Westamerica Bancorporation vs. Heritage Commerce Corp | Westamerica Bancorporation vs. Heritage Financial | Westamerica Bancorporation vs. Penns Woods Bancorp | Westamerica Bancorporation vs. 1st Source |
| CullenFrost Bankers vs. Fifth Third Bancorp | CullenFrost Bankers vs. Fifth Third Bancorp | CullenFrost Bankers vs. First Citizens BancShares | CullenFrost Bankers vs. Huntington Bancshares Incorporated |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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