Correlation Between Community West and Hawthorn Bancshares
Can any of the company-specific risk be diversified away by investing in both Community West and Hawthorn Bancshares 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 Hawthorn Bancshares 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 Hawthorn Bancshares, you can compare the effects of market volatilities on Community West and Hawthorn Bancshares 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 Hawthorn Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Hawthorn Bancshares.
Diversification Opportunities for Community West and Hawthorn Bancshares
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Community and Hawthorn is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Hawthorn Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawthorn Bancshares 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 Hawthorn Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawthorn Bancshares has no effect on the direction of Community West i.e., Community West and Hawthorn Bancshares go up and down completely randomly.
Pair Corralation between Community West and Hawthorn Bancshares
Given the investment horizon of 90 days Community West Bancshares is expected to generate 0.56 times more return on investment than Hawthorn Bancshares. However, Community West Bancshares is 1.78 times less risky than Hawthorn Bancshares. It trades about 0.44 of its potential returns per unit of risk. Hawthorn Bancshares is currently generating about 0.23 per unit of risk. If you would invest 1,842 in Community West Bancshares on September 4, 2024 and sell it today you would earn a total of 346.00 from holding Community West Bancshares or generate 18.78% 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. Hawthorn Bancshares
Performance |
| Timeline |
| Community West Bancshares |
| Hawthorn Bancshares |
Community West and Hawthorn Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Hawthorn Bancshares
The main advantage of trading using opposite Community West and Hawthorn Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Hawthorn Bancshares 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 Hawthorn Bancshares will offset losses from the drop in Hawthorn Bancshares' long position.| Community West vs. International Bancshares | Community West vs. Finward Bancorp | Community West vs. Aquagold International | Community West vs. Thrivent High Yield |
| Hawthorn Bancshares vs. Magyar Bancorp | Hawthorn Bancshares vs. Home Federal Bancorp | Hawthorn Bancshares vs. Community West Bancshares | Hawthorn Bancshares vs. LINKBANCORP |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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