Correlation Between DBS Group and PacWest Bancorp
Can any of the company-specific risk be diversified away by investing in both DBS Group and PacWest Bancorp 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 DBS Group and PacWest Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DBS Group Holdings and PacWest Bancorp, you can compare the effects of market volatilities on DBS Group and PacWest Bancorp 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 DBS Group with a short position of PacWest Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of DBS Group and PacWest Bancorp.
Diversification Opportunities for DBS Group and PacWest Bancorp
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DBS and PacWest is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings and PacWest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacWest Bancorp and DBS Group 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 DBS Group Holdings are associated (or correlated) with PacWest Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacWest Bancorp has no effect on the direction of DBS Group i.e., DBS Group and PacWest Bancorp go up and down completely randomly.
Pair Corralation between DBS Group and PacWest Bancorp
Assuming the 90 days horizon DBS Group Holdings is expected to generate 0.24 times more return on investment than PacWest Bancorp. However, DBS Group Holdings is 4.15 times less risky than PacWest Bancorp. It trades about 0.05 of its potential returns per unit of risk. PacWest Bancorp is currently generating about 0.01 per unit of risk. If you would invest 2,048 in DBS Group Holdings on September 26, 2024 and sell it today you would earn a total of 1,230 from holding DBS Group Holdings or generate 60.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 27.82% |
Values | Daily Returns |
DBS Group Holdings vs. PacWest Bancorp
Performance |
Timeline |
DBS Group Holdings |
PacWest Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
DBS Group and PacWest Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DBS Group and PacWest Bancorp
The main advantage of trading using opposite DBS Group and PacWest Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group position performs unexpectedly, PacWest Bancorp 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 PacWest Bancorp will offset losses from the drop in PacWest Bancorp's long position.DBS Group vs. Banco Bradesco SA | DBS Group vs. Itau Unibanco Banco | DBS Group vs. Deutsche Bank AG | DBS Group vs. Banco Santander Brasil |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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