Correlation Between Penns Woods and Luther Burbank
Can any of the company-specific risk be diversified away by investing in both Penns Woods and Luther Burbank 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 Luther Burbank 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 Luther Burbank, you can compare the effects of market volatilities on Penns Woods and Luther Burbank 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 Luther Burbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and Luther Burbank.
Diversification Opportunities for Penns Woods and Luther Burbank
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penns and Luther is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and Luther Burbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luther Burbank 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 Luther Burbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luther Burbank has no effect on the direction of Penns Woods i.e., Penns Woods and Luther Burbank go up and down completely randomly.
Pair Corralation between Penns Woods and Luther Burbank
If you would invest 1,900 in Penns Woods Bancorp on August 25, 2024 and sell it today you would earn a total of 1,141 from holding Penns Woods Bancorp or generate 60.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
Penns Woods Bancorp vs. Luther Burbank
Performance |
| Timeline |
| Penns Woods Bancorp |
| Luther Burbank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Penns Woods and Luther Burbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penns Woods and Luther Burbank
The main advantage of trading using opposite Penns Woods and Luther Burbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penns Woods position performs unexpectedly, Luther Burbank 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 Luther Burbank will offset losses from the drop in Luther Burbank's long position.| Penns Woods vs. 1st Source | Penns Woods vs. Great Southern Bancorp | Penns Woods vs. Waterstone Financial | Penns Woods vs. First Community |
| Luther Burbank vs. First Community | Luther Burbank vs. Community West Bancshares | Luther Burbank vs. First Financial Northwest | Luther Burbank vs. First Northwest 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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