Correlation Between Pacific West and Mission Bancorp

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

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

Diversification Opportunities for Pacific West and Mission Bancorp

-0.06

Correlation Coefficient

Pacific West  Mission Bancorp

Good diversification

The 3 months correlation between Pacific and Mission is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Pacific West Bancorp and Mission Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mission Bancorp and Pacific West 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 Pacific West Bancorp are associated (or correlated) with Mission Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mission Bancorp has no effect on the direction of Pacific West i.e., Pacific West and Mission Bancorp go up and down completely randomly.

Pair Corralation between Pacific West and Mission Bancorp

If you would invest  1,100  in Pacific West Bancorp on October 26, 2024 and sell it today you would earn a total of  10.00  from holding Pacific West Bancorp or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

Pacific West Bancorp  vs.  Mission Bancorp

Pacific West Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific West Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental drivers, Pacific West may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mission Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mission Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Mission Bancorp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pacific West and Mission Bancorp

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

The idea behind Pacific West Bancorp and Mission Bancorp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.