Correlation Between Westamerica Bancorporation and Fifth Third
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and Fifth Third 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 Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and Fifth Third Bancorp, you can compare the effects of market volatilities on Westamerica Bancorporation and Fifth Third 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 Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Fifth Third.
Diversification Opportunities for Westamerica Bancorporation and Fifth Third
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westamerica and Fifth is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp 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 Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Fifth Third go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Fifth Third
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 4.0 times less return on investment than Fifth Third. But when comparing it to its historical volatility, Westamerica Bancorporation is 1.12 times less risky than Fifth Third. It trades about 0.02 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,014 in Fifth Third Bancorp on August 30, 2024 and sell it today you would earn a total of 1,802 from holding Fifth Third Bancorp or generate 59.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. Fifth Third Bancorp
Performance |
| Timeline |
| Westamerica Bancorporation |
| Fifth Third Bancorp |
Westamerica Bancorporation and Fifth Third Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Fifth Third
The main advantage of trading using opposite Westamerica Bancorporation and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, Fifth Third 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 Fifth Third will offset losses from the drop in Fifth Third's long position.| Westamerica Bancorporation vs. SVB T Corp | Westamerica Bancorporation vs. First Capital | Westamerica Bancorporation vs. Pioneer Bankcorp | Westamerica Bancorporation vs. Liberty Northwest Bancorp |
| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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