Correlation Between WesBanco and BankFinancial
Can any of the company-specific risk be diversified away by investing in both WesBanco and BankFinancial 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 WesBanco and BankFinancial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WesBanco and BankFinancial, you can compare the effects of market volatilities on WesBanco and BankFinancial 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 WesBanco with a short position of BankFinancial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WesBanco and BankFinancial.
Diversification Opportunities for WesBanco and BankFinancial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WesBanco and BankFinancial is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding WesBanco and BankFinancial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFinancial and WesBanco 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 WesBanco are associated (or correlated) with BankFinancial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFinancial has no effect on the direction of WesBanco i.e., WesBanco and BankFinancial go up and down completely randomly.
Pair Corralation between WesBanco and BankFinancial
Assuming the 90 days horizon WesBanco is expected to generate 2.65 times less return on investment than BankFinancial. But when comparing it to its historical volatility, WesBanco is 2.1 times less risky than BankFinancial. It trades about 0.08 of its potential returns per unit of risk. BankFinancial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 763.00 in BankFinancial on September 1, 2024 and sell it today you would earn a total of 575.00 from holding BankFinancial or generate 75.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WesBanco vs. BankFinancial
Performance |
| Timeline |
| WesBanco |
| BankFinancial |
WesBanco and BankFinancial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WesBanco and BankFinancial
The main advantage of trading using opposite WesBanco and BankFinancial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WesBanco position performs unexpectedly, BankFinancial 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 BankFinancial will offset losses from the drop in BankFinancial's long position.| WesBanco vs. SFL Corporation | WesBanco vs. Eldorado Gold Corp | WesBanco vs. Griffon | WesBanco vs. Chester Mining |
| BankFinancial vs. First Business Financial | BankFinancial vs. Old Point Financial | BankFinancial vs. Parke Bancorp | BankFinancial vs. Community West Bancshares |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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