Correlation Between Crazy Woman and Community Bank

Can any of the company-specific risk be diversified away by investing in both Crazy Woman and Community Bank 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 Crazy Woman and Community Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crazy Woman Creek and Community Bank, you can compare the effects of market volatilities on Crazy Woman and Community Bank 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 Crazy Woman with a short position of Community Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crazy Woman and Community Bank.

Diversification Opportunities for Crazy Woman and Community Bank

-0.61

Correlation Coefficient

Crazy Woman  Community Bank

Excellent diversification

The 3 months correlation between Crazy and Community is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Crazy Woman Creek and Community Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bank and Crazy Woman 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 Crazy Woman Creek are associated (or correlated) with Community Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bank has no effect on the direction of Crazy Woman i.e., Crazy Woman and Community Bank go up and down completely randomly.

Pair Corralation between Crazy Woman and Community Bank

If you would invest  1,380  in Community Bank on October 26, 2024 and sell it today you would earn a total of  15.00  from holding Community Bank or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	16.67%
Values	Daily Returns

Crazy Woman Creek  vs.  Community Bank

Crazy Woman Creek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crazy Woman Creek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Crazy Woman is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Community Bank

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Community Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak fundamental drivers, Community Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Crazy Woman and Community Bank

The main advantage of trading using opposite Crazy Woman and Community Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crazy Woman position performs unexpectedly, Community Bank 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 Bank will offset losses from the drop in Community Bank's long position.

The idea behind Crazy Woman Creek and Community Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.