Correlation Between PacWest Bancorp and Caixabank

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

By analyzing existing cross correlation between PacWest Bancorp and Caixabank SA ADR, you can compare the effects of market volatilities on PacWest Bancorp and Caixabank 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 Caixabank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PacWest Bancorp and Caixabank.

Diversification Opportunities for PacWest Bancorp and Caixabank

0.0

Correlation Coefficient

PacWest Bancorp  Caixabank

Pay attention - limited upside

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

Pair Corralation between PacWest Bancorp and Caixabank

If you would invest  179.00  in Caixabank SA ADR on December 30, 2024 and sell it today you would earn a total of  81.00  from holding Caixabank SA ADR or generate 45.25% return on investment over 90 days.

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

PacWest Bancorp  vs.  Caixabank SA ADR

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.

Caixabank SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caixabank SA ADR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caixabank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PacWest Bancorp and Caixabank

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

The idea behind PacWest Bancorp and Caixabank SA ADR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.