Correlation Between Community West and United Bancorp
Can any of the company-specific risk be diversified away by investing in both Community West and United Bancorp 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 United Bancorp 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 United Bancorp, you can compare the effects of market volatilities on Community West and United Bancorp 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 United Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and United Bancorp.
Diversification Opportunities for Community West and United Bancorp
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Community and United is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and United Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United 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 United Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorp has no effect on the direction of Community West i.e., Community West and United Bancorp go up and down completely randomly.
Pair Corralation between Community West and United Bancorp
Given the investment horizon of 90 days Community West Bancshares is expected to under-perform the United Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Community West Bancshares is 2.57 times less risky than United Bancorp. The stock trades about -0.81 of its potential returns per unit of risk. The United Bancorp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 1,443 in United Bancorp on October 14, 2024 and sell it today you would lose (107.00) from holding United Bancorp or give up 7.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community West Bancshares vs. United Bancorp
Performance |
| Timeline |
| Community West Bancshares |
| United Bancorp |
Community West and United Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community West and United Bancorp
The main advantage of trading using opposite Community West and United Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, United Bancorp 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 United Bancorp will offset losses from the drop in United Bancorp'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 |
| United Bancorp vs. Rhinebeck Bancorp | United Bancorp vs. Shore Bancshares | United Bancorp vs. First Northwest Bancorp | United Bancorp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |