Correlation Between Citizens Financial and William Penn

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

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

Diversification Opportunities for Citizens Financial and William Penn

-0.6

Correlation Coefficient

Citizens Financial  William Penn

Excellent diversification

The 3 months correlation between Citizens and William is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group 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 Citizens 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 Citizens Financial Group 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 Citizens Financial i.e., Citizens Financial and William Penn go up and down completely randomly.

Pair Corralation between Citizens Financial and William Penn

Assuming the 90 days trading horizon Citizens Financial is expected to generate 12.54 times less return on investment than William Penn. But when comparing it to its historical volatility, Citizens Financial Group is 1.22 times less risky than William Penn. It trades about 0.01 of its potential returns per unit of risk. William Penn Bancorp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,180  in William Penn Bancorp on September 3, 2024 and sell it today you would earn a total of  142.00  from holding William Penn Bancorp or generate 12.03% return on investment over 90 days.

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

Citizens Financial Group  vs.  William Penn Bancorp

Citizens Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

William Penn Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Penn Bancorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, William Penn may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citizens Financial and William Penn

The main advantage of trading using opposite Citizens Financial and William Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial 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 Citizens Financial Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.