Correlation Between Western Alliance and Mauch Chunk

Can any of the company-specific risk be diversified away by investing in both Western Alliance and Mauch Chunk 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 Mauch Chunk 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 Mauch Chunk Trust, you can compare the effects of market volatilities on Western Alliance and Mauch Chunk 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 Mauch Chunk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Alliance and Mauch Chunk.

Diversification Opportunities for Western Alliance and Mauch Chunk

0.07

Correlation Coefficient

Western Alliance  Mauch Chunk

Significant diversification

The 3 months correlation between Western and Mauch is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and Mauch Chunk Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mauch Chunk Trust 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 Mauch Chunk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mauch Chunk Trust has no effect on the direction of Western Alliance i.e., Western Alliance and Mauch Chunk go up and down completely randomly.

Pair Corralation between Western Alliance and Mauch Chunk

Considering the 90-day investment horizon Western Alliance Bancorporation is expected to under-perform the Mauch Chunk. In addition to that, Western Alliance is 1.14 times more volatile than Mauch Chunk Trust. It trades about -0.04 of its total potential returns per unit of risk. Mauch Chunk Trust is currently generating about -0.02 per unit of volatility. If you would invest  648.00  in Mauch Chunk Trust on December 1, 2024 and sell it today you would lose (23.00) from holding Mauch Chunk Trust or give up 3.55% of portfolio value over 90 days.

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

Western Alliance Bancorp.  vs.  Mauch Chunk Trust

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 quite persistent basic indicators, Western Alliance is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Mauch Chunk Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mauch Chunk Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Mauch Chunk is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Western Alliance and Mauch Chunk

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

The idea behind Western Alliance Bancorporation and Mauch Chunk Trust 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.