Correlation Between Mauch Chunk and Western Alliance

Can any of the company-specific risk be diversified away by investing in both Mauch Chunk and Western Alliance 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 Mauch Chunk and Western Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Mauch Chunk and Western Alliance

-0.11

Correlation Coefficient

Mauch Chunk  Western Alliance

Good diversification

The 3 months correlation between Mauch and Western is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Mauch Chunk Trust and Western Alliance Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alliance Ban and Mauch Chunk 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 Mauch Chunk Trust are associated (or correlated) with Western Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alliance Ban has no effect on the direction of Mauch Chunk i.e., Mauch Chunk and Western Alliance go up and down completely randomly.

Pair Corralation between Mauch Chunk and Western Alliance

Given the investment horizon of 90 days Mauch Chunk Trust is expected to generate 0.78 times more return on investment than Western Alliance. However, Mauch Chunk Trust is 1.28 times less risky than Western Alliance. It trades about 0.01 of its potential returns per unit of risk. Western Alliance Bancorporation is currently generating about -0.01 per unit of risk. If you would invest  657.00  in Mauch Chunk Trust on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Mauch Chunk Trust or generate 0.46% return on investment over 90 days.

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

Mauch Chunk Trust  vs.  Western Alliance Bancorp.

Mauch Chunk Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mauch Chunk Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Mauch Chunk is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Western Alliance Ban

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Alliance Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Western Alliance is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Mauch Chunk and Western Alliance

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

The idea behind Mauch Chunk Trust and Western Alliance 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.