Correlation Between Prime Meridian and William Penn
Can any of the company-specific risk be diversified away by investing in both Prime Meridian and William Penn 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 Prime Meridian and William Penn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Meridian Holding and William Penn Bancorp, you can compare the effects of market volatilities on Prime Meridian and William Penn 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 Prime Meridian with a short position of William Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Meridian and William Penn.
Diversification Opportunities for Prime Meridian and William Penn
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prime and William is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Holding and William Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Penn Bancorp and Prime Meridian 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 Prime Meridian Holding are associated (or correlated) with William Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Penn Bancorp has no effect on the direction of Prime Meridian i.e., Prime Meridian and William Penn go up and down completely randomly.
Pair Corralation between Prime Meridian and William Penn
Given the investment horizon of 90 days Prime Meridian Holding is expected to generate 0.81 times more return on investment than William Penn. However, Prime Meridian Holding is 1.23 times less risky than William Penn. It trades about 0.45 of its potential returns per unit of risk. William Penn Bancorp is currently generating about 0.16 per unit of risk. If you would invest 2,571 in Prime Meridian Holding on August 28, 2024 and sell it today you would earn a total of 328.00 from holding Prime Meridian Holding or generate 12.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Meridian Holding vs. William Penn Bancorp
Performance |
| Timeline |
| Prime Meridian Holding |
| William Penn Bancorp |
Prime Meridian and William Penn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Meridian and William Penn
The main advantage of trading using opposite Prime Meridian and William Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Meridian position performs unexpectedly, William Penn 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 William Penn will offset losses from the drop in William Penn's long position.| Prime Meridian vs. Invesco High Income | Prime Meridian vs. Blackrock Muniholdings Ny | Prime Meridian vs. MFS Investment Grade | Prime Meridian vs. Federated Premier Municipal |
| William Penn vs. Fifth Third Bancorp | William Penn vs. Zions Bancorporation | William Penn vs. Huntington Bancshares Incorporated | William Penn vs. Comerica |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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