Correlation Between William Penn and Union Bankshares
Can any of the company-specific risk be diversified away by investing in both William Penn and Union Bankshares 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 Union Bankshares 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 Union Bankshares, you can compare the effects of market volatilities on William Penn and Union Bankshares 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 Union Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Penn and Union Bankshares.
Diversification Opportunities for William Penn and Union Bankshares
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between William and Union is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Union Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Bankshares 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 Union Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Bankshares has no effect on the direction of William Penn i.e., William Penn and Union Bankshares go up and down completely randomly.
Pair Corralation between William Penn and Union Bankshares
Given the investment horizon of 90 days William Penn is expected to generate 1.48 times less return on investment than Union Bankshares. But when comparing it to its historical volatility, William Penn Bancorp is 1.65 times less risky than Union Bankshares. It trades about 0.15 of its potential returns per unit of risk. Union Bankshares is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,646 in Union Bankshares on August 28, 2024 and sell it today you would earn a total of 477.00 from holding Union Bankshares or generate 18.03% 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. Union Bankshares
Performance |
| Timeline |
| William Penn Bancorp |
| Union Bankshares |
William Penn and Union Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with William Penn and Union Bankshares
The main advantage of trading using opposite William Penn and Union Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Penn position performs unexpectedly, Union Bankshares 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 Union Bankshares will offset losses from the drop in Union Bankshares' long position.| William Penn vs. Fifth Third Bancorp | William Penn vs. Huntington Bancshares Incorporated | William Penn vs. MT Bank |
| Union Bankshares vs. Fifth Third Bancorp | Union Bankshares vs. Huntington Bancshares Incorporated | Union Bankshares vs. MT Bank |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |