Correlation Between Western Alliance and CSB Bancorp

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

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

Diversification Opportunities for Western Alliance and CSB Bancorp

0.44

Correlation Coefficient

Western Alliance  CSB Bancorp

Very weak diversification

The 3 months correlation between Western and CSB is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Western Alliance Bancorp. and CSB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSB Bancorp and Western Alliance 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 Western Alliance Bancorporation are associated (or correlated) with CSB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSB Bancorp has no effect on the direction of Western Alliance i.e., Western Alliance and CSB Bancorp go up and down completely randomly.

Pair Corralation between Western Alliance and CSB Bancorp

Considering the 90-day investment horizon Western Alliance Bancorporation is expected to generate 2.22 times more return on investment than CSB Bancorp. However, Western Alliance is 2.22 times more volatile than CSB Bancorp. It trades about 0.13 of its potential returns per unit of risk. CSB Bancorp is currently generating about 0.17 per unit of risk. If you would invest  7,153  in Western Alliance Bancorporation on May 21, 2025 and sell it today you would earn a total of  1,135  from holding Western Alliance Bancorporation or generate 15.87% return on investment over 90 days.

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

Western Alliance Bancorp.  vs.  CSB Bancorp

Western Alliance Ban

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Western Alliance Bancorporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Western Alliance disclosed solid returns over the last few months and may actually be approaching a breakup point.

CSB Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSB Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, CSB Bancorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Western Alliance and CSB Bancorp

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

The idea behind Western Alliance Bancorporation and CSB 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.