Correlation Between Community West and Penns Woods
Can any of the company-specific risk be diversified away by investing in both Community West and Penns Woods 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 Penns Woods 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 Penns Woods Bancorp, you can compare the effects of market volatilities on Community West and Penns Woods 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 Penns Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and Penns Woods.
Diversification Opportunities for Community West and Penns Woods
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Community and Penns is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Penns Woods Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penns Woods Bancorp 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 Penns Woods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penns Woods Bancorp has no effect on the direction of Community West i.e., Community West and Penns Woods go up and down completely randomly.
Pair Corralation between Community West and Penns Woods
Given the investment horizon of 90 days Community West Bancshares is expected to generate 0.91 times more return on investment than Penns Woods. However, Community West Bancshares is 1.09 times less risky than Penns Woods. It trades about 0.39 of its potential returns per unit of risk. Penns Woods Bancorp is currently generating about 0.31 per unit of risk. If you would invest 1,871 in Community West Bancshares on August 30, 2024 and sell it today you would earn a total of 325.00 from holding Community West Bancshares or generate 17.37% 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. Penns Woods Bancorp
Performance |
| Timeline |
| Community West Bancshares |
| Penns Woods Bancorp |
Community West and Penns Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and Penns Woods
The main advantage of trading using opposite Community West and Penns Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, Penns Woods 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 Penns Woods will offset losses from the drop in Penns Woods' 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 |
| Penns Woods vs. 1st Source | Penns Woods vs. Great Southern Bancorp | Penns Woods vs. Waterstone Financial | Penns Woods vs. First Community |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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