Correlation Between OVERSEA CHINUNSPADR/2 and Westamerica Bancorporation

Can any of the company-specific risk be diversified away by investing in both OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 and Westamerica Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OVERSEA CHINUNSPADR2 and Westamerica Bancorporation, you can compare the effects of market volatilities on OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR/2 with a short position of Westamerica Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of OVERSEA CHINUNSPADR/2 and Westamerica Bancorporation.

Diversification Opportunities for OVERSEA CHINUNSPADR/2 and Westamerica Bancorporation

0.71

Correlation Coefficient

OVERSEA CHINUNSPADR/2  Westamerica Bancorporation

Poor diversification

The 3 months correlation between OVERSEA and Westamerica is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding OVERSEA CHINUNSPADR2 and Westamerica Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westamerica Bancorporation and OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR2 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 OVERSEA CHINUNSPADR/2 i.e., OVERSEA CHINUNSPADR/2 and Westamerica Bancorporation go up and down completely randomly.

Pair Corralation between OVERSEA CHINUNSPADR/2 and Westamerica Bancorporation

Assuming the 90 days trading horizon OVERSEA CHINUNSPADR2 is expected to generate 0.38 times more return on investment than Westamerica Bancorporation. However, OVERSEA CHINUNSPADR2 is 2.64 times less risky than Westamerica Bancorporation. It trades about 0.18 of its potential returns per unit of risk. Westamerica Bancorporation is currently generating about 0.07 per unit of risk. If you would invest  2,100  in OVERSEA CHINUNSPADR2 on October 15, 2024 and sell it today you would earn a total of  280.00  from holding OVERSEA CHINUNSPADR2 or generate 13.33% return on investment over 90 days.

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

OVERSEA CHINUNSPADR2  vs.  Westamerica Bancorp.

OVERSEA CHINUNSPADR/2

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OVERSEA CHINUNSPADR2 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, OVERSEA CHINUNSPADR/2 reported solid returns over the last few months and may actually be approaching a breakup point.

Westamerica Bancorporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westamerica Bancorporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Westamerica Bancorporation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OVERSEA CHINUNSPADR/2 and Westamerica Bancorporation

The main advantage of trading using opposite OVERSEA CHINUNSPADR/2 and Westamerica Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OVERSEA CHINUNSPADR/2 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 OVERSEA CHINUNSPADR2 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 Commodity Directory module to find actively traded commodities issued by global exchanges.