Correlation Between Westamerica Bancorporation and Huntington Bancshares

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

By analyzing existing cross correlation between Westamerica Bancorporation and Huntington Bancshares Incorporated, you can compare the effects of market volatilities on Westamerica Bancorporation and Huntington Bancshares 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 Westamerica Bancorporation with a short position of Huntington Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westamerica Bancorporation and Huntington Bancshares.

Diversification Opportunities for Westamerica Bancorporation and Huntington Bancshares

-0.36

Correlation Coefficient

Westamerica Bancorporation  Huntington Bancshares

Very good diversification

The 3 months correlation between Westamerica and Huntington is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Westamerica Bancorp. and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares and Westamerica Bancorporation 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 Westamerica Bancorporation are associated (or correlated) with Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of Westamerica Bancorporation i.e., Westamerica Bancorporation and Huntington Bancshares go up and down completely randomly.

Pair Corralation between Westamerica Bancorporation and Huntington Bancshares

Given the investment horizon of 90 days Westamerica Bancorporation is expected to generate 2.31 times more return on investment than Huntington Bancshares. However, Westamerica Bancorporation is 2.31 times more volatile than Huntington Bancshares Incorporated. It trades about 0.09 of its potential returns per unit of risk. Huntington Bancshares Incorporated is currently generating about 0.08 per unit of risk. If you would invest  5,100  in Westamerica Bancorporation on September 3, 2024 and sell it today you would earn a total of  623.00  from holding Westamerica Bancorporation or generate 12.22% return on investment over 90 days.

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

Westamerica Bancorp.  vs.  Huntington Bancshares Incorpor

Westamerica Bancorporation

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westamerica Bancorporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental drivers, Westamerica Bancorporation exhibited solid returns over the last few months and may actually be approaching a breakup point.

Huntington Bancshares

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Bancshares Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Huntington Bancshares is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Westamerica Bancorporation and Huntington Bancshares

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

The idea behind Westamerica Bancorporation and Huntington Bancshares Incorporated 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.