Correlation Between Penns Woods and ChoiceOne Financial
Can any of the company-specific risk be diversified away by investing in both Penns Woods and ChoiceOne Financial 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 ChoiceOne Financial 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 ChoiceOne Financial Services, you can compare the effects of market volatilities on Penns Woods and ChoiceOne Financial 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 ChoiceOne Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and ChoiceOne Financial.
Diversification Opportunities for Penns Woods and ChoiceOne Financial
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Penns and ChoiceOne is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and ChoiceOne Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChoiceOne Financial 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 ChoiceOne Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChoiceOne Financial has no effect on the direction of Penns Woods i.e., Penns Woods and ChoiceOne Financial go up and down completely randomly.
Pair Corralation between Penns Woods and ChoiceOne Financial
Given the investment horizon of 90 days Penns Woods Bancorp is expected to generate 0.97 times more return on investment than ChoiceOne Financial. However, Penns Woods Bancorp is 1.03 times less risky than ChoiceOne Financial. It trades about 0.44 of its potential returns per unit of risk. ChoiceOne Financial Services is currently generating about 0.3 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penns Woods Bancorp vs. ChoiceOne Financial Services
Performance |
| Timeline |
| Penns Woods Bancorp |
| ChoiceOne Financial |
Penns Woods and ChoiceOne Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penns Woods and ChoiceOne Financial
The main advantage of trading using opposite Penns Woods and ChoiceOne Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penns Woods position performs unexpectedly, ChoiceOne Financial 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 ChoiceOne Financial will offset losses from the drop in ChoiceOne Financial's long position.| Penns Woods vs. 1st Source | Penns Woods vs. Great Southern Bancorp | Penns Woods vs. Waterstone Financial | Penns Woods vs. First Community |
| ChoiceOne Financial vs. Home Federal Bancorp | ChoiceOne Financial vs. First Northwest Bancorp | ChoiceOne Financial vs. Lake Shore Bancorp | ChoiceOne Financial vs. Affinity Bancshares |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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