Correlation Between Penns Woods and Community West
Can any of the company-specific risk be diversified away by investing in both Penns Woods 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 Penns Woods and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penns Woods Bancorp and Community West Bancshares, you can compare the effects of market volatilities on Penns Woods 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 Penns Woods with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and Community West.
Diversification Opportunities for Penns Woods and Community West
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Penns and Community is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods 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 Penns Woods 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 Penns Woods 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 Penns Woods i.e., Penns Woods and Community West go up and down completely randomly.
Pair Corralation between Penns Woods and Community West
Given the investment horizon of 90 days Penns Woods is expected to generate 1.15 times less return on investment than Community West. In addition to that, Penns Woods is 1.09 times more volatile than Community West Bancshares. It trades about 0.31 of its total potential returns per unit of risk. Community West Bancshares is currently generating about 0.39 per unit of volatility. 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 |
Penns Woods Bancorp vs. Community West Bancshares
Performance |
| Timeline |
| Penns Woods Bancorp |
| Community West Bancshares |
Penns Woods and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penns Woods and Community West
The main advantage of trading using opposite Penns Woods and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penns Woods 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.| Penns Woods vs. 1st Source | Penns Woods vs. Great Southern Bancorp | Penns Woods vs. Waterstone Financial | Penns Woods vs. First Community |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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