Correlation Between Community West and Bank Utica

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

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

Diversification Opportunities for Community West and Bank Utica

0.75

Correlation Coefficient

Community West  Bank Utica

Poor diversification

The 3 months correlation between Community and Bank is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Bank Utica Ny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Utica Ny and Community West 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 Community West Bancshares are associated (or correlated) with Bank Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Utica Ny has no effect on the direction of Community West i.e., Community West and Bank Utica go up and down completely randomly.

Pair Corralation between Community West and Bank Utica

Given the investment horizon of 90 days Community West Bancshares is expected to generate 2.3 times more return on investment than Bank Utica. However, Community West is 2.3 times more volatile than Bank Utica Ny. It trades about 0.05 of its potential returns per unit of risk. Bank Utica Ny is currently generating about 0.04 per unit of risk. If you would invest  1,359  in Community West Bancshares on October 4, 2024 and sell it today you would earn a total of  555.50  from holding Community West Bancshares or generate 40.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.13%
Values	Daily Returns

Community West Bancshares  vs.  Bank Utica Ny

Community West Bancshares

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community West Bancshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental drivers, Community West may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bank Utica Ny

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Utica Ny are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Bank Utica disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Community West and Bank Utica

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

The idea behind Community West Bancshares and Bank Utica Ny 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.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.