Correlation Between Western Alliance and KBC Groep
Can any of the company-specific risk be diversified away by investing in both Western Alliance and KBC Groep 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 KBC Groep 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 KBC Groep NV, you can compare the effects of market volatilities on Western Alliance and KBC Groep 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 KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Alliance and KBC Groep.
Diversification Opportunities for Western Alliance and KBC Groep
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and KBC is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV 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 KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Western Alliance i.e., Western Alliance and KBC Groep go up and down completely randomly.
Pair Corralation between Western Alliance and KBC Groep
Considering the 90-day investment horizon Western Alliance Bancorporation is expected to generate 1.91 times more return on investment than KBC Groep. However, Western Alliance is 1.91 times more volatile than KBC Groep NV. It trades about 0.13 of its potential returns per unit of risk. KBC Groep NV is currently generating about 0.0 per unit of risk. If you would invest 6,247 in Western Alliance Bancorporation on August 29, 2024 and sell it today you would earn a total of 3,103 from holding Western Alliance Bancorporation or generate 49.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Alliance Bancorp. vs. KBC Groep NV
Performance |
| Timeline |
| Western Alliance Ban |
| KBC Groep NV |
Western Alliance and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Alliance and KBC Groep
The main advantage of trading using opposite Western Alliance and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Alliance position performs unexpectedly, KBC Groep 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 KBC Groep will offset losses from the drop in KBC Groep's long position.| Western Alliance vs. Zions Bancorporation | Western Alliance vs. KeyCorp | Western Alliance vs. First Horizon National | Western Alliance vs. Comerica |
| KBC Groep vs. DBS Group Holdings | KBC Groep vs. United Overseas Bank | KBC Groep vs. Overseas Chinese Banking | KBC Groep vs. China Minsh |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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