Correlation Between Community West and Glacier Bancorp
Can any of the company-specific risk be diversified away by investing in both Community West and Glacier Bancorp 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 Glacier Bancorp 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 Glacier Bancorp, you can compare the effects of market volatilities on Community West and Glacier Bancorp 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 Glacier Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Glacier Bancorp.
Diversification Opportunities for Community West and Glacier Bancorp
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Community and Glacier is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier Bancorp 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 Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of Community West i.e., Community West and Glacier Bancorp go up and down completely randomly.
Pair Corralation between Community West and Glacier Bancorp
Given the investment horizon of 90 days Community West Bancshares is expected to generate 2.13 times more return on investment than Glacier Bancorp. However, Community West is 2.13 times more volatile than Glacier Bancorp. It trades about 0.06 of its potential returns per unit of risk. Glacier Bancorp is currently generating about 0.07 per unit of risk. If you would invest 1,136 in Community West Bancshares on August 31, 2024 and sell it today you would earn a total of 1,056 from holding Community West Bancshares or generate 92.96% 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. Glacier Bancorp
Performance |
| Timeline |
| Community West Bancshares |
| Glacier Bancorp |
Community West and Glacier Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Glacier Bancorp
The main advantage of trading using opposite Community West and Glacier Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Glacier Bancorp 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 Glacier Bancorp will offset losses from the drop in Glacier Bancorp's long position.| Community West vs. KeyCorp | Community West vs. Comerica | Community West vs. First Horizon National | Community West vs. Western Alliance Bancorporation |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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