Correlation Between Chart Industries and Pacific West

Can any of the company-specific risk be diversified away by investing in both Chart Industries and Pacific West 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 Chart Industries and Pacific West into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chart Industries and Pacific West Bancorp, you can compare the effects of market volatilities on Chart Industries and Pacific West 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 Chart Industries with a short position of Pacific West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chart Industries and Pacific West.

Diversification Opportunities for Chart Industries and Pacific West

-0.17

Correlation Coefficient

Chart Industries  Pacific West

Good diversification

The 3 months correlation between Chart and Pacific is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Chart Industries and Pacific West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific West Bancorp and Chart Industries 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 Chart Industries are associated (or correlated) with Pacific West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific West Bancorp has no effect on the direction of Chart Industries i.e., Chart Industries and Pacific West go up and down completely randomly.

Pair Corralation between Chart Industries and Pacific West

Assuming the 90 days trading horizon Chart Industries is expected to under-perform the Pacific West. In addition to that, Chart Industries is 1.29 times more volatile than Pacific West Bancorp. It trades about -0.06 of its total potential returns per unit of risk. Pacific West Bancorp is currently generating about -0.05 per unit of volatility. If you would invest  1,237  in Pacific West Bancorp on December 20, 2024 and sell it today you would lose (102.00) from holding Pacific West Bancorp or give up 8.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Chart Industries  vs.  Pacific West Bancorp

Chart Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chart Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pacific West Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacific West Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Chart Industries and Pacific West

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

The idea behind Chart Industries and Pacific West Bancorp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.