Correlation Between Community West and BayCom Corp
Can any of the company-specific risk be diversified away by investing in both Community West and BayCom Corp 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 Community West and BayCom Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community West Bancshares and BayCom Corp, you can compare the effects of market volatilities on Community West and BayCom Corp 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 Community West with a short position of BayCom Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and BayCom Corp.
Diversification Opportunities for Community West and BayCom Corp
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Community and BayCom is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and BayCom Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BayCom Corp and Community West 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 Community West Bancshares are associated (or correlated) with BayCom Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BayCom Corp has no effect on the direction of Community West i.e., Community West and BayCom Corp go up and down completely randomly.
Pair Corralation between Community West and BayCom Corp
Given the investment horizon of 90 days Community West Bancshares is expected to generate 1.33 times more return on investment than BayCom Corp. However, Community West is 1.33 times more volatile than BayCom Corp. It trades about 0.08 of its potential returns per unit of risk. BayCom Corp is currently generating about 0.1 per unit of risk. If you would invest 1,506 in Community West Bancshares on August 28, 2024 and sell it today you would earn a total of 724.00 from holding Community West Bancshares or generate 48.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community West Bancshares vs. BayCom Corp
Performance |
| Timeline |
| Community West Bancshares |
| BayCom Corp |
Community West and BayCom Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and BayCom Corp
The main advantage of trading using opposite Community West and BayCom Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, BayCom Corp 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 BayCom Corp will offset losses from the drop in BayCom Corp's long position.| Community West vs. Home Federal Bancorp | Community West vs. Magyar Bancorp | Community West vs. First Northwest Bancorp | Community West vs. First Financial Northwest |
| BayCom Corp vs. Fifth Third Bancorp | BayCom Corp vs. Zions Bancorporation | BayCom Corp vs. Huntington Bancshares Incorporated | BayCom Corp vs. Comerica |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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