Correlation Between William Penn and Midland States

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Can any of the company-specific risk be diversified away by investing in both William Penn and Midland States 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 Midland States 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 Midland States Bancorp, you can compare the effects of market volatilities on William Penn and Midland States 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 Midland States. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and Midland States.

Diversification Opportunities for William Penn and Midland States

WilliamMidlandDiversified AwayWilliamMidlandDiversified Away100%
-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between William and Midland is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Midland States Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midland States 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 Midland States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midland States Bancorp has no effect on the direction of William Penn i.e., William Penn and Midland States go up and down completely randomly.

Pair Corralation between William Penn and Midland States

Given the investment horizon of 90 days William Penn Bancorp is expected to generate 1.35 times more return on investment than Midland States. However, William Penn is 1.35 times more volatile than Midland States Bancorp. It trades about 0.04 of its potential returns per unit of risk. Midland States Bancorp is currently generating about -0.06 per unit of risk. If you would invest  1,205  in William Penn Bancorp on November 23, 2024 and sell it today you would earn a total of  24.00  from holding William Penn Bancorp or generate 1.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

William Penn Bancorp  vs.  Midland States Bancorp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.15WMPN MSBIP
       Timeline  
William Penn Bancorp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days William Penn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.51212.51313.5
Midland States Bancorp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Midland States Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Midland States is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb23.52424.52525.5

William Penn and Midland States Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.32-1.77-1.22-0.67-0.120.40.951.52.052.6 0.10.20.30.4
JavaScript chart by amCharts 3.21.15WMPN MSBIP
       Returns  

Pair Trading with William Penn and Midland States

The main advantage of trading using opposite William Penn and Midland States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, Midland States 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 Midland States will offset losses from the drop in Midland States' long position.
The idea behind William Penn Bancorp and Midland States Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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