Correlation Between Bank of San Francisco and William Penn

Can any of the company-specific risk be diversified away by investing in both Bank of San Francisco and William 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 Bank of San Francisco and William Penn into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of San and William Penn Bancorp, you can compare the effects of market volatilities on Bank of San Francisco and William 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 Bank of San Francisco with a short position of William Penn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of San Francisco and William Penn.

Diversification Opportunities for Bank of San Francisco and William Penn

-0.08

Correlation Coefficient

Bank of San Francisco  William Penn

Good diversification

The 3 months correlation between Bank and William is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bank of San and William Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Penn Bancorp and Bank of San Francisco 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 Bank of San are associated (or correlated) with William Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Penn Bancorp has no effect on the direction of Bank of San Francisco i.e., Bank of San Francisco and William Penn go up and down completely randomly.

Pair Corralation between Bank of San Francisco and William Penn

Given the investment horizon of 90 days Bank of San is expected to generate 0.81 times more return on investment than William Penn. However, Bank of San is 1.24 times less risky than William Penn. It trades about -0.04 of its potential returns per unit of risk. William Penn Bancorp is currently generating about -0.13 per unit of risk. If you would invest  3,200  in Bank of San on December 21, 2024 and sell it today you would lose (100.00) from holding Bank of San or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bank of San  vs.  William Penn Bancorp

Bank of San Francisco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of San has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Bank of San Francisco is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

William Penn Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Penn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bank of San Francisco and William Penn

The main advantage of trading using opposite Bank of San Francisco and William Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of San Francisco position performs unexpectedly, William 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 William Penn will offset losses from the drop in William Penn's long position.

The idea behind Bank of San and William Penn Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.