Correlation Between Community West and Camden National
Can any of the company-specific risk be diversified away by investing in both Community West and Camden National 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 Camden National 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 Camden National, you can compare the effects of market volatilities on Community West and Camden National 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 Camden National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Camden National.
Diversification Opportunities for Community West and Camden National
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Community and Camden is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Camden National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden National 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 Camden National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden National has no effect on the direction of Community West i.e., Community West and Camden National go up and down completely randomly.
Pair Corralation between Community West and Camden National
Given the investment horizon of 90 days Community West Bancshares is expected to generate 0.51 times more return on investment than Camden National. However, Community West Bancshares is 1.95 times less risky than Camden National. It trades about 0.39 of its potential returns per unit of risk. Camden National is currently generating about 0.16 per unit of risk. If you would invest 1,871 in Community West Bancshares on August 30, 2024 and sell it today you would earn a total of 325.00 from holding Community West Bancshares or generate 17.37% 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. Camden National
Performance |
| Timeline |
| Community West Bancshares |
| Camden National |
Community West and Camden National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Camden National
The main advantage of trading using opposite Community West and Camden National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Camden National 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 Camden National will offset losses from the drop in Camden National'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 |
| Camden National vs. First United | Camden National vs. First Community | Camden National vs. Greene County Bancorp | Camden National vs. Community West Bancshares |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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