Correlation Between ChoiceOne Financial and Penns Woods
Can any of the company-specific risk be diversified away by investing in both ChoiceOne Financial and Penns Woods 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 ChoiceOne Financial and Penns Woods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChoiceOne Financial Services and Penns Woods Bancorp, you can compare the effects of market volatilities on ChoiceOne Financial and Penns Woods 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 ChoiceOne Financial with a short position of Penns Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChoiceOne Financial and Penns Woods.
Diversification Opportunities for ChoiceOne Financial and Penns Woods
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ChoiceOne and Penns is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ChoiceOne Financial Services and Penns Woods Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penns Woods Bancorp and ChoiceOne Financial 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 ChoiceOne Financial Services are associated (or correlated) with Penns Woods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penns Woods Bancorp has no effect on the direction of ChoiceOne Financial i.e., ChoiceOne Financial and Penns Woods go up and down completely randomly.
Pair Corralation between ChoiceOne Financial and Penns Woods
Given the investment horizon of 90 days ChoiceOne Financial Services is expected to under-perform the Penns Woods. But the stock apears to be less risky and, when comparing its historical volatility, ChoiceOne Financial Services is 2.54 times less risky than Penns Woods. The stock trades about -0.52 of its potential returns per unit of risk. The Penns Woods Bancorp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,073 in Penns Woods Bancorp on November 27, 2024 and sell it today you would lose (64.50) from holding Penns Woods Bancorp or give up 2.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChoiceOne Financial Services vs. Penns Woods Bancorp
Performance |
| Timeline |
| ChoiceOne Financial |
| Penns Woods Bancorp |
ChoiceOne Financial and Penns Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChoiceOne Financial and Penns Woods
The main advantage of trading using opposite ChoiceOne Financial and Penns Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChoiceOne Financial position performs unexpectedly, Penns Woods 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 Penns Woods will offset losses from the drop in Penns Woods' long position.| ChoiceOne Financial vs. Home Federal Bancorp | ChoiceOne Financial vs. First Northwest Bancorp | ChoiceOne Financial vs. Lake Shore Bancorp | ChoiceOne Financial vs. Affinity Bancshares |
| Penns Woods vs. 1st Source | Penns Woods vs. Great Southern Bancorp | Penns Woods vs. Waterstone Financial | Penns Woods vs. First Community |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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