Correlation Between Westamerica Bancorporation and Western Alliance
Can any of the company-specific risk be diversified away by investing in both Westamerica Bancorporation and Western Alliance 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 Western Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westamerica Bancorporation and Western Alliance Bancorporation, you can compare the effects of market volatilities on Westamerica Bancorporation and Western Alliance 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 Western Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Western Alliance.
Diversification Opportunities for Westamerica Bancorporation and Western Alliance
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westamerica and Western is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Western Alliance Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alliance Ban 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 Western Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alliance Ban has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Western Alliance go up and down completely randomly.
Pair Corralation between Westamerica Bancorporation and Western Alliance
Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 0.67 times more return on investment than Western Alliance. However, Westamerica Bancorporation is 1.49 times less risky than Western Alliance. It trades about -0.1 of its potential returns per unit of risk. Western Alliance Bancorporation is currently generating about -0.07 per unit of risk. If you would invest 5,713 in Westamerica Bancorporation on September 14, 2024 and sell it today you would lose (108.00) from holding Westamerica Bancorporation or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westamerica Bancorp. vs. Western Alliance Bancorp.
Performance |
| Timeline |
| Westamerica Bancorporation |
| Western Alliance Ban |
Westamerica Bancorporation and Western Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westamerica Bancorporation and Western Alliance
The main advantage of trading using opposite Westamerica Bancorporation and Western Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westamerica Bancorporation position performs unexpectedly, Western Alliance 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 Western Alliance will offset losses from the drop in Western Alliance'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 |
| Western Alliance vs. Zions Bancorporation | Western Alliance vs. KeyCorp | Western Alliance vs. First Horizon National | Western Alliance vs. Comerica |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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