Correlation Between William Penn and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both William Penn and Citizens 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 William Penn and Citizens Financial 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 Citizens Financial Group,, you can compare the effects of market volatilities on William Penn and Citizens 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 William Penn with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and Citizens Financial.
Diversification Opportunities for William Penn and Citizens Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between William and Citizens is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of William Penn i.e., William Penn and Citizens Financial go up and down completely randomly.
Pair Corralation between William Penn and Citizens Financial
Given the investment horizon of 90 days William Penn is expected to generate 3.13 times less return on investment than Citizens Financial. But when comparing it to its historical volatility, William Penn Bancorp is 2.13 times less risky than Citizens Financial. It trades about 0.12 of its potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,270 in Citizens Financial Group, on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Citizens Financial Group, or generate 12.79% 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. Citizens Financial Group,
Performance |
| Timeline |
| William Penn Bancorp |
| Citizens Financial Group, |
William Penn and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Penn and Citizens Financial
The main advantage of trading using opposite William Penn and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, Citizens 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| William Penn vs. Home Federal Bancorp | William Penn vs. First Financial Northwest | William Penn vs. First Northwest Bancorp | William Penn vs. First Capital |
| Citizens Financial vs. PNC Financial Services | Citizens Financial vs. Regions Financial | Citizens Financial vs. Fifth Third Bancorp | Citizens Financial vs. Comerica |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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