Correlation Between Bank7 Corp and Community West
Can any of the company-specific risk be diversified away by investing in both Bank7 Corp 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 Bank7 Corp and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank7 Corp and Community West Bancshares, you can compare the effects of market volatilities on Bank7 Corp 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 Bank7 Corp with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank7 Corp and Community West.
Diversification Opportunities for Bank7 Corp and Community West
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank7 and Community is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank7 Corp 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 Bank7 Corp 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 Bank7 Corp 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 Bank7 Corp i.e., Bank7 Corp and Community West go up and down completely randomly.
Pair Corralation between Bank7 Corp and Community West
Given the investment horizon of 90 days Bank7 Corp is expected to generate 2.72 times less return on investment than Community West. But when comparing it to its historical volatility, Bank7 Corp is 3.43 times less risky than Community West. It trades about 0.06 of its potential returns per unit of risk. Community West Bancshares is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,383 in Community West Bancshares on September 1, 2024 and sell it today you would earn a total of 809.00 from holding Community West Bancshares or generate 58.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank7 Corp vs. Community West Bancshares
Performance |
| Timeline |
| Bank7 Corp |
| Community West Bancshares |
Bank7 Corp and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank7 Corp and Community West
The main advantage of trading using opposite Bank7 Corp and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank7 Corp 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.| Bank7 Corp vs. Home Federal Bancorp | Bank7 Corp vs. First Financial Northwest | Bank7 Corp vs. First Northwest Bancorp | Bank7 Corp vs. First Capital |
| Community West vs. Home Federal Bancorp | Community West vs. Magyar Bancorp | Community West vs. First Northwest Bancorp | Community West vs. First Financial Northwest |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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