Correlation Between West Bancorporation and Ottawa Savings

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

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

Diversification Opportunities for West Bancorporation and Ottawa Savings

-0.4

Correlation Coefficient

West Bancorporation  Ottawa Savings

Very good diversification

The 3 months correlation between West and Ottawa is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding West Bancorp. and Ottawa Savings Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ottawa Savings Bancorp and West 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 West Bancorporation are associated (or correlated) with Ottawa Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ottawa Savings Bancorp has no effect on the direction of West Bancorporation i.e., West Bancorporation and Ottawa Savings go up and down completely randomly.

Pair Corralation between West Bancorporation and Ottawa Savings

If you would invest  1,926  in West Bancorporation on October 3, 2024 and sell it today you would earn a total of  239.00  from holding West Bancorporation or generate 12.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.19%
Values	Daily Returns

West Bancorp.  vs.  Ottawa Savings Bancorp

West Bancorporation

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in West Bancorporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, West Bancorporation sustained solid returns over the last few months and may actually be approaching a breakup point.

Ottawa Savings Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ottawa Savings Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ottawa Savings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with West Bancorporation and Ottawa Savings

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

The idea behind West Bancorporation and Ottawa Savings 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.