Correlation Between Westamerica Bancorporation and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and SEI Investments 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 SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and SEI Investments, you can compare the effects of market volatilities on Westamerica Bancorporation and SEI Investments 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 SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and SEI Investments.
Diversification Opportunities for Westamerica Bancorporation and SEI Investments
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westamerica and SEI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and SEI Investments go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and SEI Investments
Given the investment horizon of 90 days Westamerica Bancorporation is expected to under-perform the SEI Investments. But the stock apears to be less risky and, when comparing its historical volatility, Westamerica Bancorporation is 1.37 times less risky than SEI Investments. The stock trades about -0.22 of its potential returns per unit of risk. The SEI Investments is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 7,607 in SEI Investments on January 18, 2025 and sell it today you would lose (441.00) from holding SEI Investments or give up 5.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. SEI Investments
Performance |
| Timeline |
| Westamerica Bancorporation |
| SEI Investments |
Westamerica Bancorporation and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and SEI Investments
The main advantage of trading using opposite Westamerica Bancorporation and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, SEI Investments 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 SEI Investments will offset losses from the drop in SEI Investments' long position.| Westamerica Bancorporation vs. Heritage Commerce Corp | Westamerica Bancorporation vs. Heritage Financial | Westamerica Bancorporation vs. Penns Woods Bancorp | Westamerica Bancorporation vs. 1st Source |
| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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