Correlation Between Community West and Old Point
Can any of the company-specific risk be diversified away by investing in both Community West and Old Point 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 Old Point 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 Old Point Financial, you can compare the effects of market volatilities on Community West and Old Point 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 Old Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Old Point.
Diversification Opportunities for Community West and Old Point
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Community and Old is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Old Point Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Point Financial 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 Old Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Point Financial has no effect on the direction of Community West i.e., Community West and Old Point go up and down completely randomly.
Pair Corralation between Community West and Old Point
Given the investment horizon of 90 days Community West is expected to generate 12.15 times less return on investment than Old Point. But when comparing it to its historical volatility, Community West Bancshares is 1.1 times less risky than Old Point. It trades about 0.02 of its potential returns per unit of risk. Old Point Financial is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,950 in Old Point Financial on October 22, 2024 and sell it today you would earn a total of 560.00 from holding Old Point Financial or generate 28.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community West Bancshares vs. Old Point Financial
Performance |
| Timeline |
| Community West Bancshares |
| Old Point Financial |
Community West and Old Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Old Point
The main advantage of trading using opposite Community West and Old Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Old Point 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 Old Point will offset losses from the drop in Old Point'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 |
| Old Point vs. Magyar Bancorp | Old Point vs. Home Federal Bancorp | Old Point vs. Community West Bancshares | Old Point vs. First Northwest 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |