Correlation Between William Penn and City Holding
Can any of the company-specific risk be diversified away by investing in both William Penn and City Holding 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 City Holding 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 City Holding, you can compare the effects of market volatilities on William Penn and City Holding 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 City Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and City Holding.
Diversification Opportunities for William Penn and City Holding
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between William and City is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and City Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Holding 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 City Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Holding has no effect on the direction of William Penn i.e., William Penn and City Holding go up and down completely randomly.
Pair Corralation between William Penn and City Holding
Given the investment horizon of 90 days William Penn is expected to generate 2.79 times less return on investment than City Holding. But when comparing it to its historical volatility, William Penn Bancorp is 1.38 times less risky than City Holding. It trades about 0.06 of its potential returns per unit of risk. City Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 10,088 in City Holding on August 29, 2024 and sell it today you would earn a total of 3,124 from holding City Holding or generate 30.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
William Penn Bancorp vs. City Holding
Performance |
| Timeline |
| William Penn Bancorp |
| City Holding |
William Penn and City Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Penn and City Holding
The main advantage of trading using opposite William Penn and City Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, City Holding 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 City Holding will offset losses from the drop in City Holding'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 |
| City Holding vs. Community West Bancshares | City Holding vs. Oak Valley Bancorp | City Holding vs. Home Federal Bancorp | City Holding vs. Magyar 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 CEOs Directory module to screen CEOs from public companies around the world.
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