Correlation Between CARYSIL and Western Alliance

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

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

Diversification Opportunities for CARYSIL and Western Alliance

-0.12

Correlation Coefficient

CARYSIL  Western Alliance

Good diversification

The 3 months correlation between CARYSIL and Western is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CARYSIL LIMITED and Western Alliance Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alliance Ban and CARYSIL 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 CARYSIL LIMITED are associated (or correlated) with Western Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alliance Ban has no effect on the direction of CARYSIL i.e., CARYSIL and Western Alliance go up and down completely randomly.

Pair Corralation between CARYSIL and Western Alliance

Assuming the 90 days trading horizon CARYSIL is expected to generate 1.74 times less return on investment than Western Alliance. But when comparing it to its historical volatility, CARYSIL LIMITED is 1.25 times less risky than Western Alliance. It trades about 0.09 of its potential returns per unit of risk. Western Alliance Bancorporation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,605  in Western Alliance Bancorporation on February 3, 2024 and sell it today you would earn a total of  3,524  from holding Western Alliance Bancorporation or generate 135.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.59%
Values	Daily Returns

CARYSIL LIMITED  vs.  Western Alliance Bancorp.

CARYSIL LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARYSIL LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CARYSIL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Western Alliance Ban

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Alliance Bancorporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with CARYSIL and Western Alliance

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

The idea behind CARYSIL LIMITED and Western Alliance Bancorporation 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.