Correlation Between Washington Trust and Alpha Bank
Can any of the company-specific risk be diversified away by investing in both Washington Trust and Alpha 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 Washington Trust and Alpha Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Trust Bancorp and Alpha Bank SA, you can compare the effects of market volatilities on Washington Trust and Alpha 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 Washington Trust with a short position of Alpha Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and Alpha Bank.
Diversification Opportunities for Washington Trust and Alpha Bank
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Washington and Alpha is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and Alpha Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Bank SA and Washington Trust 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 Washington Trust Bancorp are associated (or correlated) with Alpha Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Bank SA has no effect on the direction of Washington Trust i.e., Washington Trust and Alpha Bank go up and down completely randomly.
Pair Corralation between Washington Trust and Alpha Bank
Given the investment horizon of 90 days Washington Trust is expected to generate 1.26 times less return on investment than Alpha Bank. But when comparing it to its historical volatility, Washington Trust Bancorp is 1.2 times less risky than Alpha Bank. It trades about 0.19 of its potential returns per unit of risk. Alpha Bank SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Alpha Bank SA on October 29, 2024 and sell it today you would earn a total of 3.00 from holding Alpha Bank SA or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. Alpha Bank SA
Performance |
| Timeline |
| Washington Trust Bancorp |
| Alpha Bank SA |
Washington Trust and Alpha Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and Alpha Bank
The main advantage of trading using opposite Washington Trust and Alpha Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust position performs unexpectedly, Alpha 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 Alpha Bank will offset losses from the drop in Alpha Bank's long position.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| Alpha Bank vs. First Hawaiian | Alpha Bank vs. Central Pacific Financial | Alpha Bank vs. Territorial Bancorp | Alpha Bank vs. Comerica |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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