Correlation Between FFW and Community West
Can any of the company-specific risk be diversified away by investing in both FFW and Community West 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 FFW and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FFW Corporation and Community West Bancshares, you can compare the effects of market volatilities on FFW and Community West 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 FFW with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of FFW and Community West.
Diversification Opportunities for FFW and Community West
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between FFW and Community is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding FFW Corp. and Community West Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community West Bancshares and FFW 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 FFW Corporation are associated (or correlated) with Community West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community West Bancshares has no effect on the direction of FFW i.e., FFW and Community West go up and down completely randomly.
Pair Corralation between FFW and Community West
Given the investment horizon of 90 days FFW Corporation is expected to under-perform the Community West. But the pink sheet apears to be less risky and, when comparing its historical volatility, FFW Corporation is 2.6 times less risky than Community West. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Community West Bancshares is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,098 in Community West Bancshares on September 2, 2024 and sell it today you would earn a total of 1,094 from holding Community West Bancshares or generate 99.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.32% |
| Values | Daily Returns |
FFW Corp. vs. Community West Bancshares
Performance |
| Timeline |
| FFW Corporation |
| Community West Bancshares |
FFW and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FFW and Community West
The main advantage of trading using opposite FFW and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FFW position performs unexpectedly, Community West 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 Community West will offset losses from the drop in Community West's long position.| FFW vs. First Farmers Financial | FFW vs. Farmers Merchants Bancorp | FFW vs. Lakeland Financial | FFW vs. Eagle Financial Services |
| Community West vs. Affinity Bancshares | Community West vs. Auburn National Bancorporation | Community West vs. BayCom Corp | Community West 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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