Correlation Between Orange County and Penns Woods
Can any of the company-specific risk be diversified away by investing in both Orange County 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 Orange County and Penns Woods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange County Bancorp and Penns Woods Bancorp, you can compare the effects of market volatilities on Orange County 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 Orange County with a short position of Penns Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange County and Penns Woods.
Diversification Opportunities for Orange County and Penns Woods
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orange and Penns is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Orange County 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 Orange 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 Orange County 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 Orange County i.e., Orange County and Penns Woods go up and down completely randomly.
Pair Corralation between Orange County and Penns Woods
Considering the 90-day investment horizon Orange County is expected to generate 6.32 times less return on investment than Penns Woods. In addition to that, Orange County is 1.39 times more volatile than Penns Woods Bancorp. It trades about 0.04 of its total potential returns per unit of risk. Penns Woods Bancorp is currently generating about 0.37 per unit of volatility. If you would invest 2,594 in Penns Woods Bancorp on August 29, 2024 and sell it today you would earn a total of 557.00 from holding Penns Woods Bancorp or generate 21.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange County Bancorp vs. Penns Woods Bancorp
Performance |
| Timeline |
| Orange County Bancorp |
| Penns Woods Bancorp |
Orange County and Penns Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange County and Penns Woods
The main advantage of trading using opposite Orange County and Penns Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange County 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.| Orange County vs. Southern States Bancshares | Orange County vs. US Century Bank | Orange County vs. Third Coast Bancshares | Orange County vs. Esquire Financial Holdings |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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