Correlation Between 1st Source and Penns Woods
Can any of the company-specific risk be diversified away by investing in both 1st Source 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 1st Source and Penns Woods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1st Source and Penns Woods Bancorp, you can compare the effects of market volatilities on 1st Source 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 1st Source with a short position of Penns Woods. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Source and Penns Woods.
Diversification Opportunities for 1st Source and Penns Woods
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 1st and Penns is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding 1st Source 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 1st Source 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 1st Source 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 1st Source i.e., 1st Source and Penns Woods go up and down completely randomly.
Pair Corralation between 1st Source and Penns Woods
Given the investment horizon of 90 days 1st Source is expected to generate 1.34 times less return on investment than Penns Woods. But when comparing it to its historical volatility, 1st Source is 1.02 times less risky than Penns Woods. It trades about 0.08 of its potential returns per unit of risk. Penns Woods Bancorp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,917 in Penns Woods Bancorp on August 25, 2024 and sell it today you would earn a total of 1,124 from holding Penns Woods Bancorp or generate 58.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
1st Source vs. Penns Woods Bancorp
Performance |
| Timeline |
| 1st Source |
| Penns Woods Bancorp |
1st Source and Penns Woods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1st Source and Penns Woods
The main advantage of trading using opposite 1st Source and Penns Woods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Source 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.| 1st Source vs. Penns Woods Bancorp | 1st Source vs. Great Southern Bancorp | 1st Source vs. Waterstone Financial | 1st Source vs. Chemung Financial Corp |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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