Correlation Between WesBanco and First Horizon

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

By analyzing existing cross correlation between WesBanco and First Horizon, you can compare the effects of market volatilities on WesBanco and First Horizon 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 First Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of WesBanco and First Horizon.

Diversification Opportunities for WesBanco and First Horizon

-0.74

Correlation Coefficient

WesBanco  First Horizon

Pay attention - limited upside

The 3 months correlation between WesBanco and First is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding WesBanco and First Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Horizon 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 First Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Horizon has no effect on the direction of WesBanco i.e., WesBanco and First Horizon go up and down completely randomly.

Pair Corralation between WesBanco and First Horizon

Assuming the 90 days horizon WesBanco is expected to generate 0.23 times more return on investment than First Horizon. However, WesBanco is 4.38 times less risky than First Horizon. It trades about 0.14 of its potential returns per unit of risk. First Horizon is currently generating about -0.13 per unit of risk. If you would invest  2,482  in WesBanco on October 10, 2024 and sell it today you would earn a total of  62.00  from holding WesBanco or generate 2.5% return on investment over 90 days.

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

WesBanco  vs.  First Horizon

WesBanco

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WesBanco are ranked lower than 11 (%) 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.

First Horizon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Horizon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with WesBanco and First Horizon

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

The idea behind WesBanco and First Horizon 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.