Correlation Between Community West and Codorus Valley

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

Diversification Opportunities for Community West and Codorus Valley

0.0

Correlation Coefficient

Community West  Codorus Valley

Pay attention - limited upside

The 3 months correlation between Community and Codorus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Community West Bancshares and Codorus Valley Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codorus Valley 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 Codorus Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codorus Valley Bancorp has no effect on the direction of Community West i.e., Community West and Codorus Valley go up and down completely randomly.

Pair Corralation between Community West and Codorus Valley

If you would invest  1,814  in Community West Bancshares on February 17, 2025 and sell it today you would earn a total of  27.00  from holding Community West Bancshares or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Community West Bancshares  vs.  Codorus Valley Bancorp

Community West Bancshares

Risk-Adjusted Performance

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Codorus Valley Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Codorus Valley Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Codorus Valley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Community West and Codorus Valley

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

The idea behind Community West Bancshares and Codorus Valley 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.