Correlation Between William Penn and TC Bancshares
Can any of the company-specific risk be diversified away by investing in both William Penn and TC Bancshares 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 TC Bancshares 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 TC Bancshares, you can compare the effects of market volatilities on William Penn and TC Bancshares 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 TC Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and TC Bancshares.
Diversification Opportunities for William Penn and TC Bancshares
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between William and TCBC is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and TC Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Bancshares 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 TC Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TC Bancshares has no effect on the direction of William Penn i.e., William Penn and TC Bancshares go up and down completely randomly.
Pair Corralation between William Penn and TC Bancshares
Given the investment horizon of 90 days William Penn Bancorp is expected to generate 0.92 times more return on investment than TC Bancshares. However, William Penn Bancorp is 1.09 times less risky than TC Bancshares. It trades about 0.03 of its potential returns per unit of risk. TC Bancshares is currently generating about 0.02 per unit of risk. If you would invest 1,217 in William Penn Bancorp on August 24, 2024 and sell it today you would earn a total of 110.50 from holding William Penn Bancorp or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 69.2% |
| Values | Daily Returns |
William Penn Bancorp vs. TC Bancshares
Performance |
| Timeline |
| William Penn Bancorp |
| TC Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
William Penn and TC Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Penn and TC Bancshares
The main advantage of trading using opposite William Penn and TC Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, TC Bancshares 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 TC Bancshares will offset losses from the drop in TC Bancshares' 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 |
| TC Bancshares vs. Home Federal Bancorp | TC Bancshares vs. Lake Shore Bancorp | TC Bancshares vs. Community West Bancshares | TC Bancshares vs. First Financial Northwest |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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