Correlation Between Community West and Ohio Valley
Can any of the company-specific risk be diversified away by investing in both Community West and Ohio Valley 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 Ohio Valley 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 Ohio Valley Banc, you can compare the effects of market volatilities on Community West and Ohio Valley 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 Ohio Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Ohio Valley.
Diversification Opportunities for Community West and Ohio Valley
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Community and Ohio is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Ohio Valley Banc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ohio Valley Banc 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 Ohio Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ohio Valley Banc has no effect on the direction of Community West i.e., Community West and Ohio Valley go up and down completely randomly.
Pair Corralation between Community West and Ohio Valley
Given the investment horizon of 90 days Community West Bancshares is expected to generate 0.7 times more return on investment than Ohio Valley. However, Community West Bancshares is 1.44 times less risky than Ohio Valley. It trades about 0.21 of its potential returns per unit of risk. Ohio Valley Banc is currently generating about 0.14 per unit of risk. If you would invest 1,914 in Community West Bancshares on August 29, 2024 and sell it today you would earn a total of 292.00 from holding Community West Bancshares or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Community West Bancshares vs. Ohio Valley Banc
Performance |
| Timeline |
| Community West Bancshares |
| Ohio Valley Banc |
Community West and Ohio Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Ohio Valley
The main advantage of trading using opposite Community West and Ohio Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Ohio Valley 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 Ohio Valley will offset losses from the drop in Ohio Valley'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 |
| Ohio Valley vs. Home Federal Bancorp | Ohio Valley vs. Lake Shore Bancorp | Ohio Valley vs. Community West Bancshares | Ohio Valley vs. Magyar 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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