Correlation Between Community West and Bogota Financial
Can any of the company-specific risk be diversified away by investing in both Community West and Bogota Financial 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 Bogota Financial 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 Bogota Financial Corp, you can compare the effects of market volatilities on Community West and Bogota Financial 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 Bogota Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Bogota Financial.
Diversification Opportunities for Community West and Bogota Financial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Community and Bogota is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Bogota Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bogota Financial 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 Bogota Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bogota Financial Corp has no effect on the direction of Community West i.e., Community West and Bogota Financial go up and down completely randomly.
Pair Corralation between Community West and Bogota Financial
Given the investment horizon of 90 days Community West is expected to generate 1.13 times less return on investment than Bogota Financial. But when comparing it to its historical volatility, Community West Bancshares is 1.23 times less risky than Bogota Financial. It trades about 0.08 of its potential returns per unit of risk. Bogota Financial Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 750.00 in Bogota Financial Corp on November 3, 2024 and sell it today you would earn a total of 19.00 from holding Bogota Financial Corp or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community West Bancshares vs. Bogota Financial Corp
Performance |
| Timeline |
| Community West Bancshares |
| Bogota Financial Corp |
Community West and Bogota Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Bogota Financial
The main advantage of trading using opposite Community West and Bogota Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Bogota Financial 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 Bogota Financial will offset losses from the drop in Bogota Financial'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 |
| Bogota Financial vs. Home Federal Bancorp | Bogota Financial vs. First Financial Northwest | Bogota Financial vs. First Northwest Bancorp | Bogota Financial vs. First Capital |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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