Correlation Between Community West and SmartFinancial,

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

Diversification Opportunities for Community West and SmartFinancial,

0.73

Correlation Coefficient

Community West  SmartFinancial,

Poor diversification

The 3 months correlation between Community and SmartFinancial, is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and SmartFinancial, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartFinancial, 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 SmartFinancial,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartFinancial, has no effect on the direction of Community West i.e., Community West and SmartFinancial, go up and down completely randomly.

Pair Corralation between Community West and SmartFinancial,

Given the investment horizon of 90 days Community West is expected to generate 4.22 times less return on investment than SmartFinancial,. But when comparing it to its historical volatility, Community West Bancshares is 1.37 times less risky than SmartFinancial,. It trades about 0.02 of its potential returns per unit of risk. SmartFinancial, is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,846  in SmartFinancial, on September 26, 2024 and sell it today you would earn a total of  254.00  from holding SmartFinancial, or generate 8.92% return on investment over 90 days.

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

Community West Bancshares  vs.  SmartFinancial,

Community West Bancshares

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Community West Bancshares are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

SmartFinancial,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SmartFinancial, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, SmartFinancial, may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Community West and SmartFinancial,

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

The idea behind Community West Bancshares and SmartFinancial, 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.