Correlation Between Washington Trust and WesBanco
Can any of the company-specific risk be diversified away by investing in both Washington Trust and WesBanco 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 WesBanco 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 WesBanco, you can compare the effects of market volatilities on Washington Trust and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and WesBanco.
Diversification Opportunities for Washington Trust and WesBanco
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Washington and WesBanco is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Washington Trust i.e., Washington Trust and WesBanco go up and down completely randomly.
Pair Corralation between Washington Trust and WesBanco
Given the investment horizon of 90 days Washington Trust Bancorp is expected to under-perform the WesBanco. In addition to that, Washington Trust is 1.88 times more volatile than WesBanco. It trades about -0.01 of its total potential returns per unit of risk. WesBanco is currently generating about 0.02 per unit of volatility. If you would invest 2,238 in WesBanco on October 14, 2024 and sell it today you would earn a total of 281.00 from holding WesBanco or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. WesBanco
Performance |
| Timeline |
| Washington Trust Bancorp |
| WesBanco |
Washington Trust and WesBanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and WesBanco
The main advantage of trading using opposite Washington Trust and WesBanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust position performs unexpectedly, WesBanco 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 WesBanco will offset losses from the drop in WesBanco's long position.| Washington Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
| WesBanco vs. Simon Property Group | WesBanco vs. Sonida Senior Living | WesBanco vs. Franklin Credit Management | WesBanco vs. Ameriprise Financial |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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