Correlation Between Community West and City Holding
Can any of the company-specific risk be diversified away by investing in both Community West and City Holding 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 City Holding 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 City Holding, you can compare the effects of market volatilities on Community West and City Holding 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 City Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and City Holding.
Diversification Opportunities for Community West and City Holding
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Community and City is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and City Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Holding 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 City Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Holding has no effect on the direction of Community West i.e., Community West and City Holding go up and down completely randomly.
Pair Corralation between Community West and City Holding
Given the investment horizon of 90 days Community West is expected to generate 1.08 times less return on investment than City Holding. In addition to that, Community West is 1.01 times more volatile than City Holding. It trades about 0.11 of its total potential returns per unit of risk. City Holding is currently generating about 0.12 per unit of volatility. If you would invest 10,088 in City Holding on August 29, 2024 and sell it today you would earn a total of 3,124 from holding City Holding or generate 30.97% 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. City Holding
Performance |
| Timeline |
| Community West Bancshares |
| City Holding |
Community West and City Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and City Holding
The main advantage of trading using opposite Community West and City Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, City Holding 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 City Holding will offset losses from the drop in City Holding'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 |
| City Holding vs. Community West Bancshares | City Holding vs. Oak Valley Bancorp | City Holding vs. Home Federal Bancorp | City Holding vs. Magyar Bancorp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |