Correlation Between Great Southern and Community West
Can any of the company-specific risk be diversified away by investing in both Great Southern 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 Great Southern and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Southern Bancorp and Community West Bancshares, you can compare the effects of market volatilities on Great Southern 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 Great Southern with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Southern and Community West.
Diversification Opportunities for Great Southern and Community West
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Community is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp 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 Great Southern 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 Great Southern Bancorp 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 Great Southern i.e., Great Southern and Community West go up and down completely randomly.
Pair Corralation between Great Southern and Community West
Given the investment horizon of 90 days Great Southern is expected to generate 1.57 times less return on investment than Community West. In addition to that, Great Southern is 2.03 times more volatile than Community West Bancshares. It trades about 0.11 of its total potential returns per unit of risk. Community West Bancshares is currently generating about 0.34 per unit of volatility. If you would invest 1,859 in Community West Bancshares on August 24, 2024 and sell it today you would earn a total of 262.00 from holding Community West Bancshares or generate 14.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Southern Bancorp vs. Community West Bancshares
Performance |
| Timeline |
| Great Southern Bancorp |
| Community West Bancshares |
Great Southern and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Southern and Community West
The main advantage of trading using opposite Great Southern and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern 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.| Great Southern vs. First Northwest Bancorp | Great Southern vs. Community West Bancshares | Great Southern vs. First Financial Northwest | Great Southern vs. First Capital |
| Community West vs. Home Federal Bancorp | Community West vs. Magyar Bancorp | Community West vs. First Northwest Bancorp | Community West vs. First Financial Northwest |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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