Correlation Between Community West and Peapack Gladstone
Can any of the company-specific risk be diversified away by investing in both Community West and Peapack Gladstone 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 Peapack Gladstone 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 Peapack Gladstone Financial, you can compare the effects of market volatilities on Community West and Peapack Gladstone 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 Peapack Gladstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Peapack Gladstone.
Diversification Opportunities for Community West and Peapack Gladstone
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Community and Peapack is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Peapack Gladstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peapack Gladstone 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 Peapack Gladstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peapack Gladstone has no effect on the direction of Community West i.e., Community West and Peapack Gladstone go up and down completely randomly.
Pair Corralation between Community West and Peapack Gladstone
Given the investment horizon of 90 days Community West is expected to generate 1.12 times less return on investment than Peapack Gladstone. But when comparing it to its historical volatility, Community West Bancshares is 2.09 times less risky than Peapack Gladstone. It trades about 0.34 of its potential returns per unit of risk. Peapack Gladstone Financial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,116 in Peapack Gladstone Financial on August 24, 2024 and sell it today you would earn a total of 460.00 from holding Peapack Gladstone Financial or generate 14.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community West Bancshares vs. Peapack Gladstone Financial
Performance |
| Timeline |
| Community West Bancshares |
| Peapack Gladstone |
Community West and Peapack Gladstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Peapack Gladstone
The main advantage of trading using opposite Community West and Peapack Gladstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Peapack Gladstone 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 Peapack Gladstone will offset losses from the drop in Peapack Gladstone'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 |
| Peapack Gladstone vs. Sound Financial Bancorp | Peapack Gladstone vs. Finward Bancorp | Peapack Gladstone vs. Franklin Financial Services | Peapack Gladstone vs. Community West Bancshares |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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