Correlation Between West Bancorporation and Inter Co
Can any of the company-specific risk be diversified away by investing in both West Bancorporation and Inter Co 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 West Bancorporation and Inter Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West Bancorporation and Inter Co Class, you can compare the effects of market volatilities on West Bancorporation and Inter Co 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 West Bancorporation with a short position of Inter Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of West Bancorporation and Inter Co.
Diversification Opportunities for West Bancorporation and Inter Co
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between West and Inter is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding West Bancorp. and Inter Co Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Co Class and West Bancorporation 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 West Bancorporation are associated (or correlated) with Inter Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Co Class has no effect on the direction of West Bancorporation i.e., West Bancorporation and Inter Co go up and down completely randomly.
Pair Corralation between West Bancorporation and Inter Co
Given the investment horizon of 90 days West Bancorporation is expected to generate 0.8 times more return on investment than Inter Co. However, West Bancorporation is 1.25 times less risky than Inter Co. It trades about 0.05 of its potential returns per unit of risk. Inter Co Class is currently generating about 0.03 per unit of risk. If you would invest 1,620 in West Bancorporation on November 28, 2024 and sell it today you would earn a total of 636.00 from holding West Bancorporation or generate 39.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
West Bancorp. vs. Inter Co Class
Performance |
| Timeline |
| West Bancorporation |
| Inter Co Class |
West Bancorporation and Inter Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West Bancorporation and Inter Co
The main advantage of trading using opposite West Bancorporation and Inter Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West Bancorporation position performs unexpectedly, Inter Co 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 Inter Co will offset losses from the drop in Inter Co's long position.| West Bancorporation vs. MidWestOne Financial Group | West Bancorporation vs. Washington Trust Bancorp | West Bancorporation vs. Univest Pennsylvania | West Bancorporation vs. Sierra Bancorp |
| Inter Co vs. Community West Bancshares | Inter Co vs. First Financial Northwest | Inter Co vs. First Northwest Bancorp | Inter Co vs. First Capital |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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