Correlation Between Provident Financial and LINKBANCORP

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

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

Diversification Opportunities for Provident Financial and LINKBANCORP

0.44

Correlation Coefficient

Provident Financial  LINKBANCORP

Very weak diversification

The 3 months correlation between Provident and LINKBANCORP is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Provident Financial Services and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP and Provident 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 Provident Financial Services are associated (or correlated) with LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of Provident Financial i.e., Provident Financial and LINKBANCORP go up and down completely randomly.

Pair Corralation between Provident Financial and LINKBANCORP

Considering the 90-day investment horizon Provident Financial is expected to generate 2.28 times less return on investment than LINKBANCORP. But when comparing it to its historical volatility, Provident Financial Services is 1.04 times less risky than LINKBANCORP. It trades about 0.0 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  757.00  in LINKBANCORP on October 22, 2024 and sell it today you would lose (29.00) from holding LINKBANCORP or give up 3.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Provident Financial Services  vs.  LINKBANCORP

Provident Financial

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Provident Financial Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Provident Financial is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

LINKBANCORP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LINKBANCORP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting forward-looking signals, LINKBANCORP sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Provident Financial and LINKBANCORP

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

The idea behind Provident Financial Services and LINKBANCORP 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.