Correlation Between Partners Bancorp and Community West

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

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

Diversification Opportunities for Partners Bancorp and Community West

0.5

Correlation Coefficient

Partners Bancorp  Community West

Very weak diversification

The 3 months correlation between Partners and Community is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Partners Bancorp and Community West Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community West Bancshares and Partners Bancorp 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 Partners Bancorp are associated (or correlated) with Community West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community West Bancshares has no effect on the direction of Partners Bancorp i.e., Partners Bancorp and Community West go up and down completely randomly.

Pair Corralation between Partners Bancorp and Community West

If you would invest  2,013  in Community West Bancshares on September 3, 2024 and sell it today you would earn a total of  179.00  from holding Community West Bancshares or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Partners Bancorp  vs.  Community West Bancshares

Partners Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Partners Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Partners Bancorp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Community West Bancshares

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community West Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Community West may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Partners Bancorp and Community West

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

The idea behind Partners Bancorp and Community West Bancshares 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.