Correlation Between Community West and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both Community West and Bankwell 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 Bankwell 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 Bankwell Financial Group, you can compare the effects of market volatilities on Community West and Bankwell 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 Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Bankwell Financial.
Diversification Opportunities for Community West and Bankwell Financial
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Community and Bankwell is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial 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 Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of Community West i.e., Community West and Bankwell Financial go up and down completely randomly.
Pair Corralation between Community West and Bankwell Financial
Given the investment horizon of 90 days Community West Bancshares is expected to generate 0.59 times more return on investment than Bankwell Financial. However, Community West Bancshares is 1.69 times less risky than Bankwell Financial. It trades about 0.18 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.11 per unit of risk. If you would invest 1,926 in Community West Bancshares on August 25, 2024 and sell it today you would earn a total of 256.00 from holding Community West Bancshares or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community West Bancshares vs. Bankwell Financial Group
Performance |
| Timeline |
| Community West Bancshares |
| Bankwell Financial |
Community West and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Bankwell Financial
The main advantage of trading using opposite Community West and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Bankwell 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 Bankwell Financial will offset losses from the drop in Bankwell 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 |
| Bankwell Financial vs. Fifth Third Bancorp | Bankwell Financial vs. Zions Bancorporation | Bankwell Financial vs. Huntington Bancshares Incorporated | Bankwell Financial vs. PNC Financial Services |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |