Correlation Between US Century and William Penn
Can any of the company-specific risk be diversified away by investing in both US Century 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 US Century and William Penn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Century Bank and William Penn Bancorp, you can compare the effects of market volatilities on US Century 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 US Century with a short position of William Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Century and William Penn.
Diversification Opportunities for US Century and William Penn
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USCB and William is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding US Century Bank 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 US Century 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 US Century Bank 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 US Century i.e., US Century and William Penn go up and down completely randomly.
Pair Corralation between US Century and William Penn
Given the investment horizon of 90 days US Century Bank is expected to generate 2.79 times more return on investment than William Penn. However, US Century is 2.79 times more volatile than William Penn Bancorp. It trades about 0.39 of its potential returns per unit of risk. William Penn Bancorp is currently generating about 0.12 per unit of risk. If you would invest 1,448 in US Century Bank on September 1, 2024 and sell it today you would earn a total of 600.00 from holding US Century Bank or generate 41.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Century Bank vs. William Penn Bancorp
Performance |
| Timeline |
| US Century Bank |
| William Penn Bancorp |
US Century and William Penn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Century and William Penn
The main advantage of trading using opposite US Century and William Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Century 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.| US Century vs. Bank of San | US Century vs. Pioneer Bankcorp | US Century vs. Liberty Northwest Bancorp | US Century vs. Summit Bancshares |
| William Penn vs. Home Federal Bancorp | William Penn vs. First Financial Northwest | William Penn vs. First Northwest Bancorp | William Penn vs. First Capital |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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