Correlation Between William Penn and Comerica
Can any of the company-specific risk be diversified away by investing in both William Penn and Comerica 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 Comerica 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 Comerica, you can compare the effects of market volatilities on William Penn and Comerica 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 Comerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and Comerica.
Diversification Opportunities for William Penn and Comerica
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between William and Comerica is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica 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 Comerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comerica has no effect on the direction of William Penn i.e., William Penn and Comerica go up and down completely randomly.
Pair Corralation between William Penn and Comerica
Given the investment horizon of 90 days William Penn is expected to generate 3.48 times less return on investment than Comerica. But when comparing it to its historical volatility, William Penn Bancorp is 1.78 times less risky than Comerica. It trades about 0.13 of its potential returns per unit of risk. Comerica is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6,267 in Comerica on August 29, 2024 and sell it today you would earn a total of 997.00 from holding Comerica or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
William Penn Bancorp vs. Comerica
Performance |
| Timeline |
| William Penn Bancorp |
| Comerica |
William Penn and Comerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Penn and Comerica
The main advantage of trading using opposite William Penn and Comerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, Comerica 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 Comerica will offset losses from the drop in Comerica'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 |
| Comerica vs. Western Alliance Bancorporation | Comerica vs. KeyCorp | Comerica vs. Truist Financial Corp | Comerica vs. Zions Bancorporation |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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