Correlation Between Commercial National and Community West
Can any of the company-specific risk be diversified away by investing in both Commercial National 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 Commercial National and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial National Financial and Community West Bancshares, you can compare the effects of market volatilities on Commercial National 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 Commercial National with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial National and Community West.
Diversification Opportunities for Commercial National and Community West
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Commercial and Community is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial 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 Commercial National 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 Commercial National Financial 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 Commercial National i.e., Commercial National and Community West go up and down completely randomly.
Pair Corralation between Commercial National and Community West
Given the investment horizon of 90 days Commercial National is expected to generate 3.79 times less return on investment than Community West. But when comparing it to its historical volatility, Commercial National Financial is 1.35 times less risky than Community West. It trades about 0.15 of its potential returns per unit of risk. Community West Bancshares is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,863 in Community West Bancshares on September 1, 2024 and sell it today you would earn a total of 329.00 from holding Community West Bancshares or generate 17.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial National Financial vs. Community West Bancshares
Performance |
| Timeline |
| Commercial National |
| Community West Bancshares |
Commercial National and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial National and Community West
The main advantage of trading using opposite Commercial National and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial National 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.| Commercial National vs. HUMANA INC | Commercial National vs. SCOR PK | Commercial National vs. Aquagold International | Commercial National vs. Thrivent High Yield |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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