Correlation Between William Penn and Blue Ridge
Can any of the company-specific risk be diversified away by investing in both William Penn and Blue Ridge 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 William Penn and Blue Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between William Penn Bancorp and Blue Ridge Bankshares, you can compare the effects of market volatilities on William Penn and Blue Ridge 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 William Penn with a short position of Blue Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and Blue Ridge.
Diversification Opportunities for William Penn and Blue Ridge
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between William and Blue is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Blue Ridge Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ridge Bankshares and William Penn 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 William Penn Bancorp are associated (or correlated) with Blue Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ridge Bankshares has no effect on the direction of William Penn i.e., William Penn and Blue Ridge go up and down completely randomly.
Pair Corralation between William Penn and Blue Ridge
Given the investment horizon of 90 days William Penn is expected to generate 2.3 times less return on investment than Blue Ridge. But when comparing it to its historical volatility, William Penn Bancorp is 2.2 times less risky than Blue Ridge. It trades about 0.17 of its potential returns per unit of risk. Blue Ridge Bankshares is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 282.00 in Blue Ridge Bankshares on August 25, 2024 and sell it today you would earn a total of 73.00 from holding Blue Ridge Bankshares or generate 25.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
William Penn Bancorp vs. Blue Ridge Bankshares
Performance |
| Timeline |
| William Penn Bancorp |
| Blue Ridge Bankshares |
William Penn and Blue Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Penn and Blue Ridge
The main advantage of trading using opposite William Penn and Blue Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, Blue Ridge 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 Blue Ridge will offset losses from the drop in Blue Ridge's long position.| William Penn vs. Fifth Third Bancorp | William Penn vs. Zions Bancorporation | William Penn vs. Huntington Bancshares Incorporated | William Penn vs. PNC Financial Services |
| Blue Ridge vs. LINKBANCORP | Blue Ridge vs. Colony Bankcorp | Blue Ridge vs. Bankwell Financial Group | Blue Ridge vs. ECB 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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