Correlation Between Westamerica Bancorporation and United Community
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and United Community 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 Community 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 Community Banks,, you can compare the effects of market volatilities on Westamerica Bancorporation and United Community 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 Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and United Community.
Diversification Opportunities for Westamerica Bancorporation and United Community
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westamerica and United is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and United Community Banks, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Community Banks, 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 Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Community Banks, has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and United Community go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and United Community
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 1.15 times less return on investment than United Community. But when comparing it to its historical volatility, Westamerica Bancorporation is 1.15 times less risky than United Community. It trades about 0.1 of its potential returns per unit of risk. United Community Banks, is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,985 in United Community Banks, on August 29, 2024 and sell it today you would earn a total of 432.00 from holding United Community Banks, or generate 14.47% 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. United Community Banks,
Performance |
| Timeline |
| Westamerica Bancorporation |
| United Community Banks, |
Westamerica Bancorporation and United Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and United Community
The main advantage of trading using opposite Westamerica Bancorporation and United Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, United Community 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 Community will offset losses from the drop in United Community'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 |
| United Community vs. Alliant Energy Corp | United Community vs. PGE Corp | United Community vs. Reservoir Media | United Community vs. Transportadora de Gas |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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