Correlation Between Banc Of and Washington Federal

Can any of the company-specific risk be diversified away by investing in both Banc Of and Washington Federal 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 Banc Of and Washington Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Banc of California and Washington Federal, you can compare the effects of market volatilities on Banc Of and Washington Federal 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 Banc Of with a short position of Washington Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banc Of and Washington Federal.

Diversification Opportunities for Banc Of and Washington Federal

-0.78

Correlation Coefficient

Banc Of  Washington Federal

Pay attention - limited upside

The 3 months correlation between Banc and Washington is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Banc of California and Washington Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Federal and Banc Of 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 Banc of California are associated (or correlated) with Washington Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Federal has no effect on the direction of Banc Of i.e., Banc Of and Washington Federal go up and down completely randomly.

Pair Corralation between Banc Of and Washington Federal

Assuming the 90 days trading horizon Banc of California is expected to generate 0.42 times more return on investment than Washington Federal. However, Banc of California is 2.38 times less risky than Washington Federal. It trades about -0.03 of its potential returns per unit of risk. Washington Federal is currently generating about -0.25 per unit of risk. If you would invest  2,463  in Banc of California on October 14, 2024 and sell it today you would lose (8.00) from holding Banc of California or give up 0.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Banc of California  vs.  Washington Federal

Banc of California

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banc of California are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Banc Of is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Washington Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Washington Federal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Banc Of and Washington Federal

The main advantage of trading using opposite Banc Of and Washington Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banc Of position performs unexpectedly, Washington Federal 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 Washington Federal will offset losses from the drop in Washington Federal's long position.

The idea behind Banc of California and Washington Federal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..