Correlation Between Western Alliance and Woori Financial
Can any of the company-specific risk be diversified away by investing in both Western Alliance and Woori Financial 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 Woori Financial 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 Woori Financial Group, you can compare the effects of market volatilities on Western Alliance and Woori Financial 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 Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Alliance and Woori Financial.
Diversification Opportunities for Western Alliance and Woori Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Woori is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Western Alliance i.e., Western Alliance and Woori Financial go up and down completely randomly.
Pair Corralation between Western Alliance and Woori Financial
Considering the 90-day investment horizon Western Alliance Bancorporation is expected to generate 2.99 times more return on investment than Woori Financial. However, Western Alliance is 2.99 times more volatile than Woori Financial Group. It trades about 0.18 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.16 per unit of risk. If you would invest 8,441 in Western Alliance Bancorporation on August 28, 2024 and sell it today you would earn a total of 1,125 from holding Western Alliance Bancorporation or generate 13.33% 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. Woori Financial Group
Performance |
| Timeline |
| Western Alliance Ban |
| Woori Financial Group |
Western Alliance and Woori Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Alliance and Woori Financial
The main advantage of trading using opposite Western Alliance and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Alliance position performs unexpectedly, Woori Financial 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 Woori Financial will offset losses from the drop in Woori Financial's long position.| Western Alliance vs. Fifth Third Bancorp | Western Alliance vs. Zions Bancorporation | Western Alliance vs. Huntington Bancshares Incorporated | Western Alliance vs. Comerica |
| Woori Financial vs. Banco Santander Brasil | Woori Financial vs. CrossFirst Bankshares | Woori Financial vs. Banco Bradesco SA | Woori Financial vs. CF Bankshares |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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