Correlation Between PacWest Bancorp and Bank Rakyat

Can any of the company-specific risk be diversified away by investing in both PacWest Bancorp and Bank Rakyat 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 PacWest Bancorp and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for PacWest Bancorp and Bank Rakyat

0.0

Correlation Coefficient

PacWest Bancorp  Bank Rakyat

Pay attention - limited upside

The 3 months correlation between PacWest and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PacWest Bancorp and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and PacWest Bancorp 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 PacWest Bancorp are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat has no effect on the direction of PacWest Bancorp i.e., PacWest Bancorp and Bank Rakyat go up and down completely randomly.

Pair Corralation between PacWest Bancorp and Bank Rakyat

If you would invest  1,264  in Bank Rakyat on December 29, 2024 and sell it today you would lose (38.00) from holding Bank Rakyat or give up 3.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PacWest Bancorp  vs.  Bank Rakyat

PacWest Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PacWest Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, PacWest Bancorp is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bank Rakyat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Bank Rakyat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PacWest Bancorp and Bank Rakyat

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

The idea behind PacWest Bancorp and Bank Rakyat 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.