Correlation Between Community West and Kearny Financial
Can any of the company-specific risk be diversified away by investing in both Community West and Kearny Financial 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 Kearny Financial 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 Kearny Financial Corp, you can compare the effects of market volatilities on Community West and Kearny Financial 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 Kearny Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Kearny Financial.
Diversification Opportunities for Community West and Kearny Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Community and Kearny is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Kearny Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kearny Financial Corp 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 Kearny Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kearny Financial Corp has no effect on the direction of Community West i.e., Community West and Kearny Financial go up and down completely randomly.
Pair Corralation between Community West and Kearny Financial
Given the investment horizon of 90 days Community West is expected to generate 3.71 times less return on investment than Kearny Financial. But when comparing it to its historical volatility, Community West Bancshares is 2.05 times less risky than Kearny Financial. It trades about 0.06 of its potential returns per unit of risk. Kearny Financial Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 675.00 in Kearny Financial Corp on August 24, 2024 and sell it today you would earn a total of 144.00 from holding Kearny Financial Corp or generate 21.33% 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. Kearny Financial Corp
Performance |
| Timeline |
| Community West Bancshares |
| Kearny Financial Corp |
Community West and Kearny Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Kearny Financial
The main advantage of trading using opposite Community West and Kearny Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Kearny Financial 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 Kearny Financial will offset losses from the drop in Kearny Financial'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 |
| Kearny Financial vs. National Bank Holdings | Kearny Financial vs. Community West Bancshares | Kearny Financial vs. Financial Institutions | Kearny Financial vs. Heritage Financial |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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