Correlation Between Penns Woods and Colony Bankcorp
Can any of the company-specific risk be diversified away by investing in both Penns Woods and Colony Bankcorp 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 Penns Woods and Colony Bankcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penns Woods Bancorp and Colony Bankcorp, you can compare the effects of market volatilities on Penns Woods and Colony Bankcorp 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 Penns Woods with a short position of Colony Bankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and Colony Bankcorp.
Diversification Opportunities for Penns Woods and Colony Bankcorp
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Penns and Colony is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and Colony Bankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colony Bankcorp and Penns Woods 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 Penns Woods Bancorp are associated (or correlated) with Colony Bankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colony Bankcorp has no effect on the direction of Penns Woods i.e., Penns Woods and Colony Bankcorp go up and down completely randomly.
Pair Corralation between Penns Woods and Colony Bankcorp
Given the investment horizon of 90 days Penns Woods Bancorp is expected to generate 0.64 times more return on investment than Colony Bankcorp. However, Penns Woods Bancorp is 1.57 times less risky than Colony Bankcorp. It trades about 0.44 of its potential returns per unit of risk. Colony Bankcorp is currently generating about 0.25 per unit of risk. 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 |
Penns Woods Bancorp vs. Colony Bankcorp
Performance |
| Timeline |
| Penns Woods Bancorp |
| Colony Bankcorp |
Penns Woods and Colony Bankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penns Woods and Colony Bankcorp
The main advantage of trading using opposite Penns Woods and Colony Bankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penns Woods position performs unexpectedly, Colony Bankcorp 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 Colony Bankcorp will offset losses from the drop in Colony Bankcorp's long position.| Penns Woods vs. 1st Source | Penns Woods vs. Great Southern Bancorp | Penns Woods vs. Waterstone Financial | Penns Woods vs. First Community |
| Colony Bankcorp vs. Affinity Bancshares | Colony Bankcorp vs. Southern California Bancorp | Colony Bankcorp vs. Auburn National Bancorporation | Colony Bankcorp vs. BayCom Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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