Correlation Between Mid Penn and Washington Trust
Can any of the company-specific risk be diversified away by investing in both Mid Penn and Washington Trust 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 Trust 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 Trust Bancorp, you can compare the effects of market volatilities on Mid Penn and Washington Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Penn and Washington Trust.
Diversification Opportunities for Mid Penn and Washington Trust
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid and Washington is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mid Penn Bancorp and Washington Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Trust Bancorp 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Trust Bancorp has no effect on the direction of Mid Penn i.e., Mid Penn and Washington Trust go up and down completely randomly.
Pair Corralation between Mid Penn and Washington Trust
Considering the 90-day investment horizon Mid Penn is expected to generate 1.0 times less return on investment than Washington Trust. But when comparing it to its historical volatility, Mid Penn Bancorp is 1.28 times less risky than Washington Trust. It trades about 0.16 of its potential returns per unit of risk. Washington Trust Bancorp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,506 in Washington Trust Bancorp on August 24, 2024 and sell it today you would earn a total of 1,154 from holding Washington Trust Bancorp or generate 46.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Penn Bancorp vs. Washington Trust Bancorp
Performance |
| Timeline |
| Mid Penn Bancorp |
| Washington Trust Bancorp |
Mid Penn and Washington Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Penn and Washington Trust
The main advantage of trading using opposite Mid Penn and Washington Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Penn position performs unexpectedly, Washington Trust 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 Trust will offset losses from the drop in Washington Trust'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 Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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