Correlation Between Western Alliance and PacWest Bancorp
Can any of the company-specific risk be diversified away by investing in both Western Alliance and PacWest Bancorp 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 Western Alliance and PacWest Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Alliance Bancorporation and PacWest Bancorp, you can compare the effects of market volatilities on Western Alliance and PacWest Bancorp 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 Western Alliance with a short position of PacWest Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Alliance and PacWest Bancorp.
Diversification Opportunities for Western Alliance and PacWest Bancorp
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and PacWest is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and PacWest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacWest Bancorp and Western Alliance 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 Western Alliance Bancorporation are associated (or correlated) with PacWest Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacWest Bancorp has no effect on the direction of Western Alliance i.e., Western Alliance and PacWest Bancorp go up and down completely randomly.
Pair Corralation between Western Alliance and PacWest Bancorp
If you would invest 2,039 in Western Alliance Bancorporation on September 1, 2024 and sell it today you would earn a total of 156.00 from holding Western Alliance Bancorporation or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Western Alliance Bancorp. vs. PacWest Bancorp
Performance |
| Timeline |
| Western Alliance Ban |
| PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Western Alliance and PacWest Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Alliance and PacWest Bancorp
The main advantage of trading using opposite Western Alliance and PacWest Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Alliance position performs unexpectedly, PacWest Bancorp 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 PacWest Bancorp will offset losses from the drop in PacWest Bancorp's long position.| Western Alliance vs. Fifth Third Bancorp | Western Alliance vs. Fifth Third Bancorp | Western Alliance vs. First Citizens BancShares | Western Alliance vs. Huntington Bancshares Incorporated |
| PacWest Bancorp vs. Zions Bancorporation | PacWest Bancorp vs. KeyCorp | PacWest Bancorp vs. Comerica | PacWest Bancorp vs. First Horizon National |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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