Correlation Between PT Bank and Western Alliance

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

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

Diversification Opportunities for PT Bank and Western Alliance

0.19

Correlation Coefficient

PT Bank  Western Alliance

Average diversification

The 3 months correlation between PBCRF and Western is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central 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 PT Bank 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 PT Bank Central 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 PT Bank i.e., PT Bank and Western Alliance go up and down completely randomly.

Pair Corralation between PT Bank and Western Alliance

Assuming the 90 days horizon PT Bank Central is expected to under-perform the Western Alliance. In addition to that, PT Bank is 2.51 times more volatile than Western Alliance Bancorporation. It trades about -0.08 of its total potential returns per unit of risk. Western Alliance Bancorporation is currently generating about -0.11 per unit of volatility. If you would invest  9,359  in Western Alliance Bancorporation on November 28, 2024 and sell it today you would lose (652.50) from holding Western Alliance Bancorporation or give up 6.97% of portfolio value over 90 days.

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

PT Bank Central  vs.  Western Alliance Bancorp.

PT Bank Central

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with PT Bank and Western Alliance

The main advantage of trading using opposite PT Bank and Western Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank 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 PT Bank Central 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.