Correlation Between Western Alliance and Swedbank
Can any of the company-specific risk be diversified away by investing in both Western Alliance and Swedbank 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 Swedbank 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 Swedbank AB, you can compare the effects of market volatilities on Western Alliance and Swedbank 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 Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Alliance and Swedbank.
Diversification Opportunities for Western Alliance and Swedbank
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Swedbank is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB 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 Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of Western Alliance i.e., Western Alliance and Swedbank go up and down completely randomly.
Pair Corralation between Western Alliance and Swedbank
Considering the 90-day investment horizon Western Alliance Bancorporation is expected to generate 1.82 times more return on investment than Swedbank. However, Western Alliance is 1.82 times more volatile than Swedbank AB. It trades about 0.13 of its potential returns per unit of risk. Swedbank AB is currently generating about -0.03 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Alliance Bancorp. vs. Swedbank AB
Performance |
| Timeline |
| Western Alliance Ban |
| Swedbank AB |
Western Alliance and Swedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Alliance and Swedbank
The main advantage of trading using opposite Western Alliance and Swedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Alliance position performs unexpectedly, Swedbank 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 Swedbank will offset losses from the drop in Swedbank's long position.| Western Alliance vs. Zions Bancorporation | Western Alliance vs. KeyCorp | Western Alliance vs. First Horizon National | Western Alliance vs. Comerica |
| Swedbank vs. United Overseas Bank | Swedbank vs. KBC Groep NV | Swedbank vs. Jyske Bank AS | Swedbank vs. Israel Discount Bank |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |