Correlation Between Westamerica Bancorporation and Heritage Commerce
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and Heritage Commerce 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 Heritage Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and Heritage Commerce Corp, you can compare the effects of market volatilities on Westamerica Bancorporation and Heritage Commerce 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 Heritage Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Heritage Commerce.
Diversification Opportunities for Westamerica Bancorporation and Heritage Commerce
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westamerica and Heritage is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Heritage Commerce Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Commerce Corp 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 Heritage Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Commerce Corp has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Heritage Commerce go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Heritage Commerce
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 0.97 times more return on investment than Heritage Commerce. However, Westamerica Bancorporation is 1.03 times less risky than Heritage Commerce. It trades about 0.18 of its potential returns per unit of risk. Heritage Commerce Corp is currently generating about 0.16 per unit of risk. If you would invest 5,206 in Westamerica Bancorporation on August 28, 2024 and sell it today you would earn a total of 617.00 from holding Westamerica Bancorporation or generate 11.85% 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. Heritage Commerce Corp
Performance |
| Timeline |
| Westamerica Bancorporation |
| Heritage Commerce Corp |
Westamerica Bancorporation and Heritage Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Heritage Commerce
The main advantage of trading using opposite Westamerica Bancorporation and Heritage Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, Heritage Commerce 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 Heritage Commerce will offset losses from the drop in Heritage Commerce'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 |
| Heritage Commerce vs. Home Federal Bancorp | Heritage Commerce vs. First Financial Northwest | Heritage Commerce vs. First Northwest Bancorp | Heritage Commerce vs. First Capital |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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