Correlation Between Western Alliance and MT Bank
Can any of the company-specific risk be diversified away by investing in both Western Alliance and MT Bank 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 MT Bank 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 MT Bank, you can compare the effects of market volatilities on Western Alliance and MT Bank 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 MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Alliance and MT Bank.
Diversification Opportunities for Western Alliance and MT Bank
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and MTB is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and MT Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank has no effect on the direction of Western Alliance i.e., Western Alliance and MT Bank go up and down completely randomly.
Pair Corralation between Western Alliance and MT Bank
Considering the 90-day investment horizon Western Alliance Bancorporation is expected to under-perform the MT Bank. In addition to that, Western Alliance is 2.29 times more volatile than MT Bank. It trades about 0.0 of its total potential returns per unit of risk. MT Bank is currently generating about 0.05 per unit of volatility. If you would invest 19,676 in MT Bank on November 18, 2024 and sell it today you would earn a total of 206.00 from holding MT Bank or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Alliance Bancorp. vs. MT Bank
Performance |
| Timeline |
| Western Alliance Ban |
| MT Bank |
Western Alliance and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Alliance and MT Bank
The main advantage of trading using opposite Western Alliance and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Alliance position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| Western Alliance vs. Zions Bancorporation | Western Alliance vs. KeyCorp | Western Alliance vs. First Horizon National | Western Alliance vs. Comerica |
| MT Bank vs. US Bancorp | MT Bank vs. Truist Financial Corp | MT Bank vs. Fifth Third Bancorp | MT Bank vs. KeyCorp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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