Correlation Between Westamerica Bancorporation and Finward Bancorp
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and Finward Bancorp 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 Finward Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and Finward Bancorp, you can compare the effects of market volatilities on Westamerica Bancorporation and Finward Bancorp 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 Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Finward Bancorp.
Diversification Opportunities for Westamerica Bancorporation and Finward Bancorp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westamerica and Finward is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward 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 Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Finward Bancorp go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Finward Bancorp
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 0.95 times more return on investment than Finward Bancorp. However, Westamerica Bancorporation is 1.05 times less risky than Finward Bancorp. It trades about -0.03 of its potential returns per unit of risk. Finward Bancorp is currently generating about -0.1 per unit of risk. If you would invest 5,246 in Westamerica Bancorporation on November 1, 2024 and sell it today you would lose (68.00) from holding Westamerica Bancorporation or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. Finward Bancorp
Performance |
| Timeline |
| Westamerica Bancorporation |
| Finward Bancorp |
Westamerica Bancorporation and Finward Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Finward Bancorp
The main advantage of trading using opposite Westamerica Bancorporation and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, Finward Bancorp 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 Finward Bancorp will offset losses from the drop in Finward Bancorp'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 |
| Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. Home Federal 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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