Correlation Between Waterstone Financial and Mid Penn
Can any of the company-specific risk be diversified away by investing in both Waterstone Financial and Mid Penn 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 Waterstone Financial and Mid Penn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waterstone Financial and Mid Penn Bancorp, you can compare the effects of market volatilities on Waterstone Financial and Mid Penn 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 Waterstone Financial with a short position of Mid Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waterstone Financial and Mid Penn.
Diversification Opportunities for Waterstone Financial and Mid Penn
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Waterstone and Mid is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Waterstone Financial and Mid Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Penn Bancorp and Waterstone Financial 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 Waterstone Financial are associated (or correlated) with Mid Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Penn Bancorp has no effect on the direction of Waterstone Financial i.e., Waterstone Financial and Mid Penn go up and down completely randomly.
Pair Corralation between Waterstone Financial and Mid Penn
Given the investment horizon of 90 days Waterstone Financial is expected to generate 1.59 times less return on investment than Mid Penn. In addition to that, Waterstone Financial is 1.05 times more volatile than Mid Penn Bancorp. It trades about 0.06 of its total potential returns per unit of risk. Mid Penn Bancorp is currently generating about 0.1 per unit of volatility. If you would invest 2,100 in Mid Penn Bancorp on August 27, 2024 and sell it today you would earn a total of 1,143 from holding Mid Penn Bancorp or generate 54.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waterstone Financial vs. Mid Penn Bancorp
Performance |
| Timeline |
| Waterstone Financial |
| Mid Penn Bancorp |
Waterstone Financial and Mid Penn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waterstone Financial and Mid Penn
The main advantage of trading using opposite Waterstone Financial and Mid Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waterstone Financial position performs unexpectedly, Mid Penn 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 Mid Penn will offset losses from the drop in Mid Penn's long position.| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
| Mid Penn vs. Affinity Bancshares | Mid Penn vs. Home Federal Bancorp | Mid Penn vs. Franklin Financial Services | Mid Penn vs. ACNB Corporation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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