Correlation Between WesBanco and Evans Bancorp

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

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

Diversification Opportunities for WesBanco and Evans Bancorp

-0.13

Correlation Coefficient

WesBanco  Evans Bancorp

Good diversification

The 3 months correlation between WesBanco and Evans is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding WesBanco and Evans Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evans Bancorp and WesBanco 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 WesBanco are associated (or correlated) with Evans Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evans Bancorp has no effect on the direction of WesBanco i.e., WesBanco and Evans Bancorp go up and down completely randomly.

Pair Corralation between WesBanco and Evans Bancorp

Assuming the 90 days horizon WesBanco is expected to generate 1.18 times less return on investment than Evans Bancorp. But when comparing it to its historical volatility, WesBanco is 5.25 times less risky than Evans Bancorp. It trades about 0.1 of its potential returns per unit of risk. Evans Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,324  in Evans Bancorp on November 19, 2024 and sell it today you would earn a total of  60.00  from holding Evans Bancorp or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

WesBanco  vs.  Evans Bancorp

WesBanco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, WesBanco is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Evans Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evans Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Evans Bancorp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with WesBanco and Evans Bancorp

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

The idea behind WesBanco and Evans 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.