Correlation Between Microbot Medical and Westamerica Bancorporation

Can any of the company-specific risk be diversified away by investing in both Microbot Medical and Westamerica Bancorporation 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 Microbot Medical and Westamerica Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microbot Medical and Westamerica Bancorporation, you can compare the effects of market volatilities on Microbot Medical and Westamerica Bancorporation 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 Microbot Medical with a short position of Westamerica Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and Westamerica Bancorporation.

Diversification Opportunities for Microbot Medical and Westamerica Bancorporation

-0.31

Correlation Coefficient

Microbot Medical  Westamerica Bancorporation

Very good diversification

The 3 months correlation between Microbot and Westamerica is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Westamerica Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westamerica Bancorporation and Microbot Medical 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 Microbot Medical are associated (or correlated) with Westamerica Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westamerica Bancorporation has no effect on the direction of Microbot Medical i.e., Microbot Medical and Westamerica Bancorporation go up and down completely randomly.

Pair Corralation between Microbot Medical and Westamerica Bancorporation

Assuming the 90 days trading horizon Microbot Medical is expected to generate 8.64 times more return on investment than Westamerica Bancorporation. However, Microbot Medical is 8.64 times more volatile than Westamerica Bancorporation. It trades about 0.11 of its potential returns per unit of risk. Westamerica Bancorporation is currently generating about 0.05 per unit of risk. If you would invest  90.00  in Microbot Medical on October 25, 2024 and sell it today you would earn a total of  88.00  from holding Microbot Medical or generate 97.78% return on investment over 90 days.

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

Microbot Medical  vs.  Westamerica Bancorp.

Microbot Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Westamerica Bancorporation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Westamerica Bancorporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Westamerica Bancorporation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Microbot Medical and Westamerica Bancorporation

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

The idea behind Microbot Medical and Westamerica Bancorporation 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.