Correlation Between Summit Bancshares and Community West
Can any of the company-specific risk be diversified away by investing in both Summit Bancshares 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 Summit Bancshares and Community West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bancshares and Community West Bancshares, you can compare the effects of market volatilities on Summit Bancshares 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 Summit Bancshares with a short position of Community West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bancshares and Community West.
Diversification Opportunities for Summit Bancshares and Community West
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Community is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bancshares 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 Summit Bancshares 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 Summit Bancshares 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 Summit Bancshares i.e., Summit Bancshares and Community West go up and down completely randomly.
Pair Corralation between Summit Bancshares and Community West
Given the investment horizon of 90 days Summit Bancshares is expected to generate 0.89 times more return on investment than Community West. However, Summit Bancshares is 1.12 times less risky than Community West. It trades about 0.08 of its potential returns per unit of risk. Community West Bancshares is currently generating about 0.06 per unit of risk. If you would invest 4,155 in Summit Bancshares on November 8, 2024 and sell it today you would earn a total of 795.00 from holding Summit Bancshares or generate 19.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 49.39% |
| Values | Daily Returns |
Summit Bancshares vs. Community West Bancshares
Performance |
| Timeline |
| Summit Bancshares |
| Community West Bancshares |
Summit Bancshares and Community West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Bancshares and Community West
The main advantage of trading using opposite Summit Bancshares and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bancshares 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.| Summit Bancshares vs. Pioneer Bankcorp | Summit Bancshares vs. Liberty Northwest Bancorp | Summit Bancshares vs. First Community |
| Community West vs. US Bancorp | Community West vs. Truist Financial Corp | Community West vs. KeyCorp | Community West vs. Citizens Financial Group, |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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