Correlation Between Community West and HarborOne Bancorp

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Can any of the company-specific risk be diversified away by investing in both Community West and HarborOne Bancorp 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 HarborOne Bancorp 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 HarborOne Bancorp, you can compare the effects of market volatilities on Community West and HarborOne Bancorp 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 HarborOne Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community West and HarborOne Bancorp.

Diversification Opportunities for Community West and HarborOne Bancorp

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Community and HarborOne is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and HarborOne Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HarborOne Bancorp 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 HarborOne Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HarborOne Bancorp has no effect on the direction of Community West i.e., Community West and HarborOne Bancorp go up and down completely randomly.

Pair Corralation between Community West and HarborOne Bancorp

Given the investment horizon of 90 days Community West Bancshares is expected to generate 1.1 times more return on investment than HarborOne Bancorp. However, Community West is 1.1 times more volatile than HarborOne Bancorp. It trades about 0.06 of its potential returns per unit of risk. HarborOne Bancorp is currently generating about 0.02 per unit of risk. If you would invest  1,344  in Community West Bancshares on October 11, 2024 and sell it today you would earn a total of  480.00  from holding Community West Bancshares or generate 35.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Community West Bancshares  vs.  HarborOne Bancorp

 Performance 
       Timeline  
Community West Bancshares 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Community West Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Community West is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
HarborOne Bancorp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HarborOne Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Community West and HarborOne Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Community West and HarborOne Bancorp

The main advantage of trading using opposite Community West and HarborOne Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community West position performs unexpectedly, HarborOne Bancorp 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 HarborOne Bancorp will offset losses from the drop in HarborOne Bancorp's long position.
The idea behind Community West Bancshares and HarborOne Bancorp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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