Correlation Between Westamerica Bancorporation and First Guaranty
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and First Guaranty 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 Guaranty 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 Guaranty Bancshares, you can compare the effects of market volatilities on Westamerica Bancorporation and First Guaranty 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 Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and First Guaranty.
Diversification Opportunities for Westamerica Bancorporation and First Guaranty
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westamerica and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty 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 First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and First Guaranty go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and First Guaranty
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 2.38 times less return on investment than First Guaranty. In addition to that, Westamerica Bancorporation is 1.37 times more volatile than First Guaranty Bancshares. It trades about 0.19 of its total potential returns per unit of risk. First Guaranty Bancshares is currently generating about 0.61 per unit of volatility. If you would invest 1,075 in First Guaranty Bancshares on September 1, 2024 and sell it today you would earn a total of 356.00 from holding First Guaranty Bancshares or generate 33.12% 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 Guaranty Bancshares
Performance |
| Timeline |
| Westamerica Bancorporation |
| First Guaranty Bancshares |
Westamerica Bancorporation and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and First Guaranty
The main advantage of trading using opposite Westamerica Bancorporation and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, First Guaranty 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 Guaranty will offset losses from the drop in First Guaranty'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 |
| First Guaranty vs. Community West Bancshares | First Guaranty vs. First Northwest Bancorp | First Guaranty vs. First Financial Northwest | First Guaranty vs. Great Southern 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |