Correlation Between Greene County and Community West

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

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

Diversification Opportunities for Greene County and Community West

0.89

Correlation Coefficient

Greene County  Community West

Very poor diversification

The 3 months correlation between Greene and Community is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Greene County 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 Greene County 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 Greene County 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 Greene County i.e., Greene County and Community West go up and down completely randomly.

Pair Corralation between Greene County and Community West

Given the investment horizon of 90 days Greene County is expected to generate 1.1 times less return on investment than Community West. In addition to that, Greene County is 1.51 times more volatile than Community West Bancshares. It trades about 0.04 of its total potential returns per unit of risk. Community West Bancshares is currently generating about 0.06 per unit of volatility. If you would invest  1,776  in Community West Bancshares on May 5, 2025 and sell it today you would earn a total of  97.00  from holding Community West Bancshares or generate 5.46% return on investment over 90 days.

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

Greene County Bancorp  vs.  Community West Bancshares

Greene County Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greene County Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Greene County is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Community West Bancshares

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Community West Bancshares are ranked lower than 4 (%) 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.

Pair Trading with Greene County and Community West

The main advantage of trading using opposite Greene County and Community West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greene County 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 Greene County 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.