Correlation Between William Penn and Midland States
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
-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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
William Penn Bancorp vs. Midland States Bancorp
Performance |
| Timeline |
| William Penn Bancorp |
| Midland States Bancorp |
William Penn and Midland States Volatility Contrast
Predicted Return Density |
| 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.| William Penn vs. Home Federal Bancorp | ||
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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