Correlation Between William Penn and Magyar Bancorp
Can any of the company-specific risk be diversified away by investing in both William Penn and Magyar Bancorp 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 Magyar Bancorp 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 Magyar Bancorp, you can compare the effects of market volatilities on William Penn and Magyar Bancorp 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 Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and Magyar Bancorp.
Diversification Opportunities for William Penn and Magyar Bancorp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between William and Magyar is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp 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 Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of William Penn i.e., William Penn and Magyar Bancorp go up and down completely randomly.
Pair Corralation between William Penn and Magyar Bancorp
Given the investment horizon of 90 days William Penn is expected to generate 1.73 times less return on investment than Magyar Bancorp. But when comparing it to its historical volatility, William Penn Bancorp is 1.21 times less risky than Magyar Bancorp. It trades about 0.04 of its potential returns per unit of risk. Magyar Bancorp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,134 in Magyar Bancorp on August 28, 2024 and sell it today you would earn a total of 191.00 from holding Magyar Bancorp or generate 16.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.09% |
| Values | Daily Returns |
William Penn Bancorp vs. Magyar Bancorp
Performance |
| Timeline |
| William Penn Bancorp |
| Magyar Bancorp |
William Penn and Magyar Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Penn and Magyar Bancorp
The main advantage of trading using opposite William Penn and Magyar Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, Magyar Bancorp 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 Magyar Bancorp will offset losses from the drop in Magyar Bancorp's long position.| William Penn vs. Fifth Third Bancorp | William Penn vs. Zions Bancorporation | William Penn vs. Huntington Bancshares Incorporated | William Penn vs. Comerica |
| Magyar Bancorp vs. Fifth Third Bancorp | Magyar Bancorp vs. Zions Bancorporation | Magyar Bancorp vs. Huntington Bancshares Incorporated | Magyar Bancorp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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