Correlation Between Community West and Commercial National
Can any of the company-specific risk be diversified away by investing in both Community West and Commercial 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 Commercial 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 Commercial National Financial, you can compare the effects of market volatilities on Community West and Commercial 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 Commercial National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Commercial National.
Diversification Opportunities for Community West and Commercial National
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Community and Commercial is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Commercial National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial 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 Commercial National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial National has no effect on the direction of Community West i.e., Community West and Commercial National go up and down completely randomly.
Pair Corralation between Community West and Commercial National
Given the investment horizon of 90 days Community West Bancshares is expected to generate 1.5 times more return on investment than Commercial National. However, Community West is 1.5 times more volatile than Commercial National Financial. It trades about 0.06 of its potential returns per unit of risk. Commercial National Financial is currently generating about 0.06 per unit of risk. If you would invest 1,413 in Community West Bancshares on November 8, 2024 and sell it today you would earn a total of 528.00 from holding Community West Bancshares or generate 37.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 72.47% |
| Values | Daily Returns |
Community West Bancshares vs. Commercial National Financial
Performance |
| Timeline |
| Community West Bancshares |
| Commercial National |
Community West and Commercial National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Commercial National
The main advantage of trading using opposite Community West and Commercial National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Commercial 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 Commercial National will offset losses from the drop in Commercial National's long position.| Community West vs. US Bancorp | Community West vs. Truist Financial Corp | Community West vs. KeyCorp | Community West vs. Citizens Financial Group, |
| Commercial National vs. Eastern Michigan Financial | Commercial National vs. Mifflinburg Bancorp | Commercial National vs. Apollo Bancorp | Commercial National vs. Community Bankers |
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.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |