Correlation Between Western Alliance and Bankinter

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

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

Diversification Opportunities for Western Alliance and Bankinter

-0.53

Correlation Coefficient

Western Alliance  Bankinter

Excellent diversification

The 3 months correlation between Western and Bankinter is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and Bankinter SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankinter SA ADR and Western Alliance 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 Western Alliance Bancorporation are associated (or correlated) with Bankinter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankinter SA ADR has no effect on the direction of Western Alliance i.e., Western Alliance and Bankinter go up and down completely randomly.

Pair Corralation between Western Alliance and Bankinter

Considering the 90-day investment horizon Western Alliance Bancorporation is expected to under-perform the Bankinter. In addition to that, Western Alliance is 1.2 times more volatile than Bankinter SA ADR. It trades about -0.05 of its total potential returns per unit of risk. Bankinter SA ADR is currently generating about 0.29 per unit of volatility. If you would invest  792.00  in Bankinter SA ADR on December 30, 2024 and sell it today you would earn a total of  342.00  from holding Bankinter SA ADR or generate 43.18% return on investment over 90 days.

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

Western Alliance Bancorp.  vs.  Bankinter SA ADR

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.

Bankinter SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bankinter SA ADR are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Bankinter showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Alliance and Bankinter

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

The idea behind Western Alliance Bancorporation and Bankinter 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.