Correlation Between First Capital and Western Alliance

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

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

Diversification Opportunities for First Capital and Western Alliance

-0.64

Correlation Coefficient

First Capital  Western Alliance

Excellent diversification

The 3 months correlation between First and Western is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Capital 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 First Capital 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 First Capital 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 First Capital i.e., First Capital and Western Alliance go up and down completely randomly.

Pair Corralation between First Capital and Western Alliance

Given the investment horizon of 90 days First Capital is expected to under-perform the Western Alliance. In addition to that, First Capital is 1.2 times more volatile than Western Alliance Bancorporation. It trades about -0.21 of its total potential returns per unit of risk. Western Alliance Bancorporation is currently generating about 0.07 per unit of volatility. If you would invest  7,167  in Western Alliance Bancorporation on May 3, 2025 and sell it today you would earn a total of  589.00  from holding Western Alliance Bancorporation or generate 8.22% return on investment over 90 days.

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

First Capital  vs.  Western Alliance Bancorp.

First Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Western Alliance Ban

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Alliance Bancorporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Western Alliance may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First Capital and Western Alliance

The main advantage of trading using opposite First Capital and Western Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Capital 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 First Capital 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.

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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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.