Correlation Between Mid Penn and Washington Federal
Can any of the company-specific risk be diversified away by investing in both Mid Penn and Washington Federal 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 Mid Penn and Washington Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Penn Bancorp and Washington Federal, you can compare the effects of market volatilities on Mid Penn and Washington Federal 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 Mid Penn with a short position of Washington Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Penn and Washington Federal.
Diversification Opportunities for Mid Penn and Washington Federal
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mid and Washington is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mid Penn Bancorp and Washington Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Federal and Mid Penn 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 Mid Penn Bancorp are associated (or correlated) with Washington Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Federal has no effect on the direction of Mid Penn i.e., Mid Penn and Washington Federal go up and down completely randomly.
Pair Corralation between Mid Penn and Washington Federal
Considering the 90-day investment horizon Mid Penn Bancorp is expected to generate 1.0 times more return on investment than Washington Federal. However, Mid Penn Bancorp is 1.0 times less risky than Washington Federal. It trades about 0.16 of its potential returns per unit of risk. Washington Federal is currently generating about 0.12 per unit of risk. If you would invest 2,132 in Mid Penn Bancorp on August 24, 2024 and sell it today you would earn a total of 1,033 from holding Mid Penn Bancorp or generate 48.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Penn Bancorp vs. Washington Federal
Performance |
| Timeline |
| Mid Penn Bancorp |
| Washington Federal |
Mid Penn and Washington Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Penn and Washington Federal
The main advantage of trading using opposite Mid Penn and Washington Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Penn position performs unexpectedly, Washington Federal 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 Washington Federal will offset losses from the drop in Washington Federal's long position.| Mid Penn vs. Affinity Bancshares | Mid Penn vs. Home Federal Bancorp | Mid Penn vs. Franklin Financial Services | Mid Penn vs. ACNB Corporation |
| Washington Federal vs. Waterstone Financial | Washington Federal vs. Mid Penn Bancorp | Washington Federal vs. ST Bancorp | Washington Federal vs. Republic Bancorp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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