Correlation Between Banco De and Community West

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Banco De and Community West 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 Banco De and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco De Chile and Community West Bancshares, you can compare the effects of market volatilities on Banco De and Community West 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 Banco De with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Community West.

Diversification Opportunities for Banco De and Community West

BancoCommunityDiversified AwayBancoCommunityDiversified Away100%
-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Banco and Community is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Community West Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community West Bancshares and Banco De 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 Banco De Chile are associated (or correlated) with Community West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community West Bancshares has no effect on the direction of Banco De i.e., Banco De and Community West go up and down completely randomly.

Pair Corralation between Banco De and Community West

Considering the 90-day investment horizon Banco De Chile is expected to generate 0.91 times more return on investment than Community West. However, Banco De Chile is 1.1 times less risky than Community West. It trades about 0.44 of its potential returns per unit of risk. Community West Bancshares is currently generating about -0.1 per unit of risk. If you would invest  2,417  in Banco De Chile on November 29, 2024 and sell it today you would earn a total of  232.00  from holding Banco De Chile or generate 9.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Banco De Chile  vs.  Community West Bancshares

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-5051015
JavaScript chart by amCharts 3.21.15BCH CWBC
       Timeline  
Banco De Chile 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Banco De Chile are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Banco De demonstrated solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb222324252627
Community West Bancshares 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Community West Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1819202122

Banco De and Community West Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.44-2.58-1.71-0.850.00.931.882.833.78 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15BCH CWBC
       Returns  

Pair Trading with Banco De and Community West

The main advantage of trading using opposite Banco De and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De position performs unexpectedly, Community West 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 Community West will offset losses from the drop in Community West's long position.
The idea behind Banco De Chile and Community West Bancshares 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

Other Complementary Tools

Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm