Correlation Between Private Bancorp and Washington Business

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

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

Diversification Opportunities for Private Bancorp and Washington Business

0.58

Correlation Coefficient

Private Bancorp  Washington Business

Very weak diversification

The 3 months correlation between Private and Washington is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Private Bancorp of and Washington Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Business Bank and Private 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 Private Bancorp of are associated (or correlated) with Washington Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Business Bank has no effect on the direction of Private Bancorp i.e., Private Bancorp and Washington Business go up and down completely randomly.

Pair Corralation between Private Bancorp and Washington Business

Given the investment horizon of 90 days Private Bancorp of is expected to generate 1.47 times more return on investment than Washington Business. However, Private Bancorp is 1.47 times more volatile than Washington Business Bank. It trades about 0.14 of its potential returns per unit of risk. Washington Business Bank is currently generating about 0.18 per unit of risk. If you would invest  4,473  in Private Bancorp of on September 4, 2024 and sell it today you would earn a total of  497.00  from holding Private Bancorp of or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Private Bancorp of  vs.  Washington Business Bank

Private Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Private Bancorp of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Private Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Washington Business Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Washington Business Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Washington Business may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Private Bancorp and Washington Business

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

The idea behind Private Bancorp of and Washington Business Bank 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.