Correlation Between MT Bank and Community West
Can any of the company-specific risk be diversified away by investing in both MT Bank 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 MT Bank and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT Bank and Community West Bancshares, you can compare the effects of market volatilities on MT Bank 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 MT Bank with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Community West.
Diversification Opportunities for MT Bank and Community West
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MTB and Community is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank 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 MT Bank 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 MT Bank 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 MT Bank i.e., MT Bank and Community West go up and down completely randomly.
Pair Corralation between MT Bank and Community West
Considering the 90-day investment horizon MT Bank is expected to generate 1.35 times less return on investment than Community West. In addition to that, MT Bank is 1.53 times more volatile than Community West Bancshares. It trades about 0.18 of its total potential returns per unit of risk. Community West Bancshares is currently generating about 0.37 per unit of volatility. If you would invest 1,882 in Community West Bancshares on August 31, 2024 and sell it today you would earn a total of 310.00 from holding Community West Bancshares or generate 16.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT Bank vs. Community West Bancshares
Performance |
| Timeline |
| MT Bank |
| Community West Bancshares |
MT Bank and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT Bank and Community West
The main advantage of trading using opposite MT Bank and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank 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.| MT Bank vs. US Bancorp | MT Bank vs. Truist Financial Corp | MT Bank vs. Fifth Third Bancorp | MT Bank vs. KeyCorp |
| Community West vs. KeyCorp | Community West vs. Comerica | Community West vs. First Horizon National | Community West vs. Western Alliance Bancorporation |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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