Correlation Between Westamerica Bancorporation and Horizon Bancorp
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and Horizon 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 Horizon 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 Horizon Bancorp, you can compare the effects of market volatilities on Westamerica Bancorporation and Horizon 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 Horizon Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Horizon Bancorp.
Diversification Opportunities for Westamerica Bancorporation and Horizon Bancorp
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westamerica and Horizon is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Horizon Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon 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 Horizon Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Bancorp has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Horizon Bancorp go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Horizon Bancorp
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 1.22 times less return on investment than Horizon Bancorp. In addition to that, Westamerica Bancorporation is 1.05 times more volatile than Horizon Bancorp. It trades about 0.18 of its total potential returns per unit of risk. Horizon Bancorp is currently generating about 0.23 per unit of volatility. If you would invest 1,626 in Horizon Bancorp on August 28, 2024 and sell it today you would earn a total of 231.00 from holding Horizon Bancorp or generate 14.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Westamerica Bancorp. vs. Horizon Bancorp
Performance |
| Timeline |
| Westamerica Bancorporation |
| Horizon Bancorp |
Westamerica Bancorporation and Horizon Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Horizon Bancorp
The main advantage of trading using opposite Westamerica Bancorporation and Horizon Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, Horizon 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 Horizon Bancorp will offset losses from the drop in Horizon Bancorp's long position.| Westamerica Bancorporation vs. Fifth Third Bancorp | Westamerica Bancorporation vs. Huntington Bancshares Incorporated | Westamerica Bancorporation vs. Comerica | Westamerica Bancorporation vs. MT Bank |
| Horizon Bancorp vs. Fifth Third Bancorp | Horizon Bancorp vs. Huntington Bancshares Incorporated | Horizon Bancorp vs. Comerica | Horizon Bancorp vs. MT Bank |
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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