Correlation Between William Penn and South Plains
Can any of the company-specific risk be diversified away by investing in both William Penn and South Plains 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 South Plains 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 South Plains Financial, you can compare the effects of market volatilities on William Penn and South Plains 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 South Plains. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and South Plains.
Diversification Opportunities for William Penn and South Plains
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between William and South is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and South Plains Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Plains Financial 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 South Plains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Plains Financial has no effect on the direction of William Penn i.e., William Penn and South Plains go up and down completely randomly.
Pair Corralation between William Penn and South Plains
Given the investment horizon of 90 days William Penn Bancorp is expected to generate 0.74 times more return on investment than South Plains. However, William Penn Bancorp is 1.34 times less risky than South Plains. It trades about 0.25 of its potential returns per unit of risk. South Plains Financial is currently generating about 0.14 per unit of risk. If you would invest 1,173 in William Penn Bancorp on November 3, 2024 and sell it today you would earn a total of 88.00 from holding William Penn Bancorp or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
William Penn Bancorp vs. South Plains Financial
Performance |
| Timeline |
| William Penn Bancorp |
| South Plains Financial |
William Penn and South Plains Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Penn and South Plains
The main advantage of trading using opposite William Penn and South Plains positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, South Plains 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 South Plains will offset losses from the drop in South Plains' long position.| William Penn vs. US Bancorp | William Penn vs. Truist Financial Corp | William Penn vs. Fifth Third Bancorp | William Penn vs. KeyCorp |
| South Plains vs. Sound Financial Bancorp | South Plains vs. Finward Bancorp | South Plains vs. Franklin Financial Services | South Plains vs. Community West Bancshares |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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