Correlation Between ChoiceOne Financial and Community West
Can any of the company-specific risk be diversified away by investing in both ChoiceOne Financial 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 ChoiceOne Financial and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChoiceOne Financial Services and Community West Bancshares, you can compare the effects of market volatilities on ChoiceOne Financial 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 ChoiceOne Financial with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChoiceOne Financial and Community West.
Diversification Opportunities for ChoiceOne Financial and Community West
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ChoiceOne and Community is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ChoiceOne Financial Services 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 ChoiceOne 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 ChoiceOne Financial Services 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 ChoiceOne Financial i.e., ChoiceOne Financial and Community West go up and down completely randomly.
Pair Corralation between ChoiceOne Financial and Community West
Given the investment horizon of 90 days ChoiceOne Financial Services is expected to generate 1.39 times more return on investment than Community West. However, ChoiceOne Financial is 1.39 times more volatile than Community West Bancshares. It trades about 0.04 of its potential returns per unit of risk. Community West Bancshares is currently generating about -0.15 per unit of risk. If you would invest 3,427 in ChoiceOne Financial Services on October 20, 2024 and sell it today you would earn a total of 42.00 from holding ChoiceOne Financial Services or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChoiceOne Financial Services vs. Community West Bancshares
Performance |
| Timeline |
| ChoiceOne Financial |
| Community West Bancshares |
ChoiceOne Financial and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChoiceOne Financial and Community West
The main advantage of trading using opposite ChoiceOne Financial and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChoiceOne Financial 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.| ChoiceOne Financial vs. Home Federal Bancorp | ChoiceOne Financial vs. First Northwest Bancorp | ChoiceOne Financial vs. Lake Shore Bancorp | ChoiceOne Financial vs. Affinity Bancshares |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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