Correlation Between Westamerica Bancorporation and SB Financial
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and SB Financial 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 SB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and SB Financial Group, you can compare the effects of market volatilities on Westamerica Bancorporation and SB Financial 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 SB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and SB Financial.
Diversification Opportunities for Westamerica Bancorporation and SB Financial
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Westamerica and SBFG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and SB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SB Financial Group 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 SB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SB Financial Group has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and SB Financial go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and SB Financial
Given the investment horizon of 90 days Westamerica Bancorporation is expected to under-perform the SB Financial. But the stock apears to be less risky and, when comparing its historical volatility, Westamerica Bancorporation is 1.01 times less risky than SB Financial. The stock trades about -0.03 of its potential returns per unit of risk. The SB Financial Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,091 in SB Financial Group on November 1, 2024 and sell it today you would earn a total of 135.00 from holding SB Financial Group or generate 6.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. SB Financial Group
Performance |
| Timeline |
| Westamerica Bancorporation |
| SB Financial Group |
Westamerica Bancorporation and SB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and SB Financial
The main advantage of trading using opposite Westamerica Bancorporation and SB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, SB Financial 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 SB Financial will offset losses from the drop in SB Financial'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 |
| SB Financial vs. Home Federal Bancorp | SB Financial vs. Lake Shore Bancorp | SB Financial vs. National Bankshares | SB Financial vs. Sound Financial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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