Correlation Between Community West and FFW
Can any of the company-specific risk be diversified away by investing in both Community West and FFW 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 FFW 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 FFW Corporation, you can compare the effects of market volatilities on Community West and FFW 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 FFW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and FFW.
Diversification Opportunities for Community West and FFW
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Community and FFW is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and FFW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFW Corporation 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 FFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFW Corporation has no effect on the direction of Community West i.e., Community West and FFW go up and down completely randomly.
Pair Corralation between Community West and FFW
Given the investment horizon of 90 days Community West Bancshares is expected to under-perform the FFW. In addition to that, Community West is 1.25 times more volatile than FFW Corporation. It trades about -0.14 of its total potential returns per unit of risk. FFW Corporation is currently generating about 0.04 per unit of volatility. If you would invest 3,875 in FFW Corporation on November 28, 2024 and sell it today you would earn a total of 25.00 from holding FFW Corporation or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community West Bancshares vs. FFW Corp.
Performance |
| Timeline |
| Community West Bancshares |
| FFW Corporation |
Community West and FFW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and FFW
The main advantage of trading using opposite Community West and FFW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, FFW 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 FFW will offset losses from the drop in FFW's long position.| Community West vs. Home Federal Bancorp | Community West vs. First Financial Northwest | Community West vs. First Northwest Bancorp | Community West vs. Magyar Bancorp |
| FFW vs. First Farmers Financial | FFW vs. Farmers Merchants Bancorp | FFW vs. Lakeland Financial | FFW vs. Eagle 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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