Correlation Between IF Bancorp and Penns Woods
Can any of the company-specific risk be diversified away by investing in both IF Bancorp 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 IF Bancorp and Penns Woods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IF Bancorp and Penns Woods Bancorp, you can compare the effects of market volatilities on IF Bancorp 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 IF Bancorp with a short position of Penns Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of IF Bancorp and Penns Woods.
Diversification Opportunities for IF Bancorp and Penns Woods
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IROQ and Penns is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding IF Bancorp 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 IF 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 IF Bancorp 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 IF Bancorp i.e., IF Bancorp and Penns Woods go up and down completely randomly.
Pair Corralation between IF Bancorp and Penns Woods
Given the investment horizon of 90 days IF Bancorp is expected to generate 4.49 times less return on investment than Penns Woods. In addition to that, IF Bancorp is 1.36 times more volatile than Penns Woods Bancorp. It trades about 0.07 of its total potential returns per unit of risk. Penns Woods Bancorp is currently generating about 0.44 per unit of volatility. If you would invest 2,700 in Penns Woods Bancorp on September 1, 2024 and sell it today you would earn a total of 528.00 from holding Penns Woods Bancorp or generate 19.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IF Bancorp vs. Penns Woods Bancorp
Performance |
| Timeline |
| IF Bancorp |
| Penns Woods Bancorp |
IF Bancorp and Penns Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IF Bancorp and Penns Woods
The main advantage of trading using opposite IF Bancorp and Penns Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IF Bancorp 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.| IF Bancorp vs. Affinity Bancshares | IF Bancorp vs. Southern California Bancorp | IF Bancorp vs. Auburn National Bancorporation | IF Bancorp vs. BayCom Corp |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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