Correlation Between Westamerica Bancorporation and United Security
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and United Security 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 United Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and United Security Bancshares, you can compare the effects of market volatilities on Westamerica Bancorporation and United Security 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 United Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and United Security.
Diversification Opportunities for Westamerica Bancorporation and United Security
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westamerica and United is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and United Security Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Security Banc 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 United Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Security Banc has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and United Security go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and United Security
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 4.27 times less return on investment than United Security. In addition to that, Westamerica Bancorporation is 1.05 times more volatile than United Security Bancshares. It trades about 0.01 of its total potential returns per unit of risk. United Security Bancshares is currently generating about 0.06 per unit of volatility. If you would invest 619.00 in United Security Bancshares on August 28, 2024 and sell it today you would earn a total of 361.00 from holding United Security Bancshares or generate 58.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. United Security Bancshares
Performance |
| Timeline |
| Westamerica Bancorporation |
| United Security Banc |
Westamerica Bancorporation and United Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and United Security
The main advantage of trading using opposite Westamerica Bancorporation and United Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, United Security 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 United Security will offset losses from the drop in United Security's long position.| Westamerica Bancorporation vs. Fifth Third Bancorp | Westamerica Bancorporation vs. Huntington Bancshares Incorporated | Westamerica Bancorporation vs. MT Bank |
| United Security vs. Home Federal Bancorp | United Security vs. Lake Shore Bancorp | United Security vs. Community West Bancshares | United Security vs. First Northwest 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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