Correlation Between Orrstown Financial and Popular

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

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

Diversification Opportunities for Orrstown Financial and Popular

0.51

Correlation Coefficient

Orrstown Financial  Popular

Very weak diversification

The 3 months correlation between Orrstown and Popular is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Orrstown Financial Services and Popular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular and Orrstown 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 Orrstown Financial Services are associated (or correlated) with Popular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular has no effect on the direction of Orrstown Financial i.e., Orrstown Financial and Popular go up and down completely randomly.

Pair Corralation between Orrstown Financial and Popular

Given the investment horizon of 90 days Orrstown Financial Services is expected to under-perform the Popular. But the stock apears to be less risky and, when comparing its historical volatility, Orrstown Financial Services is 1.2 times less risky than Popular. The stock trades about -0.21 of its potential returns per unit of risk. The Popular is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  9,351  in Popular on December 30, 2024 and sell it today you would lose (199.00) from holding Popular or give up 2.13% of portfolio value over 90 days.

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

Orrstown Financial Services  vs.  Popular

Orrstown Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orrstown Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Popular

Risk-Adjusted Performance

Very Weak

Over the last 90 days Popular has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Popular is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Orrstown Financial and Popular

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

The idea behind Orrstown Financial Services and Popular 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.