Correlation Between Community West and Hancock Whitney

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

Diversification Opportunities for Community West and Hancock Whitney

0.87

Correlation Coefficient

Community West  Hancock Whitney

Very poor diversification

The 3 months correlation between Community and Hancock is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Hancock Whitney Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hancock Whitney Corp 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 Hancock Whitney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hancock Whitney Corp has no effect on the direction of Community West i.e., Community West and Hancock Whitney go up and down completely randomly.

Pair Corralation between Community West and Hancock Whitney

Given the investment horizon of 90 days Community West Bancshares is expected to generate 1.17 times more return on investment than Hancock Whitney. However, Community West is 1.17 times more volatile than Hancock Whitney Corp. It trades about 0.07 of its potential returns per unit of risk. Hancock Whitney Corp is currently generating about 0.07 per unit of risk. If you would invest  1,344  in Community West Bancshares on September 23, 2024 and sell it today you would earn a total of  610.00  from holding Community West Bancshares or generate 45.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Community West Bancshares  vs.  Hancock Whitney Corp

Community West Bancshares

Risk-Adjusted Performance

0 of 100

Very 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.

Hancock Whitney Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hancock Whitney Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Hancock Whitney may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Community West and Hancock Whitney

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

The idea behind Community West Bancshares and Hancock Whitney Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.