Correlation Between WSFS Financial and West Bancorporation

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

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

Diversification Opportunities for WSFS Financial and West Bancorporation

0.57

Correlation Coefficient

WSFS Financial  West Bancorporation

Very weak diversification

The 3 months correlation between WSFS and West is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding WSFS Financial and West Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Bancorporation and WSFS Financial 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 WSFS Financial are associated (or correlated) with West Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Bancorporation has no effect on the direction of WSFS Financial i.e., WSFS Financial and West Bancorporation go up and down completely randomly.

Pair Corralation between WSFS Financial and West Bancorporation

Given the investment horizon of 90 days WSFS Financial is expected to generate 0.87 times more return on investment than West Bancorporation. However, WSFS Financial is 1.15 times less risky than West Bancorporation. It trades about 0.02 of its potential returns per unit of risk. West Bancorporation is currently generating about -0.07 per unit of risk. If you would invest  5,289  in WSFS Financial on May 5, 2025 and sell it today you would earn a total of  87.00  from holding WSFS Financial or generate 1.64% return on investment over 90 days.

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

WSFS Financial  vs.  West Bancorp.

WSFS Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WSFS Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, WSFS Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

West Bancorporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days West Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with WSFS Financial and West Bancorporation

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

The idea behind WSFS Financial and West 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..