Correlation Between Community West and Postal Savings
Can any of the company-specific risk be diversified away by investing in both Community West and Postal Savings 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 Postal Savings 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 Postal Savings Bank, you can compare the effects of market volatilities on Community West and Postal Savings 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 Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Postal Savings.
Diversification Opportunities for Community West and Postal Savings
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Community and Postal is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Community West i.e., Community West and Postal Savings go up and down completely randomly.
Pair Corralation between Community West and Postal Savings
Given the investment horizon of 90 days Community West is expected to generate 1.05 times less return on investment than Postal Savings. But when comparing it to its historical volatility, Community West Bancshares is 1.2 times less risky than Postal Savings. It trades about 0.11 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Postal Savings Bank on August 24, 2024 and sell it today you would earn a total of 13.00 from holding Postal Savings Bank or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community West Bancshares vs. Postal Savings Bank
Performance |
| Timeline |
| Community West Bancshares |
| Postal Savings Bank |
Community West and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Postal Savings
The main advantage of trading using opposite Community West and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' 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 |
| Postal Savings vs. China Merchants Bank | Postal Savings vs. China Merchants Bank | Postal Savings vs. Community West Bancshares | Postal Savings vs. China Everbright Bank |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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