Correlation Between Parke Bancorp and Mid Penn

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

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

Diversification Opportunities for Parke Bancorp and Mid Penn

0.9

Correlation Coefficient

Parke Bancorp  Mid Penn

Almost no diversification

The 3 months correlation between Parke and Mid is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Parke Bancorp 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 Parke Bancorp 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 Parke Bancorp 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 Parke Bancorp i.e., Parke Bancorp and Mid Penn go up and down completely randomly.

Pair Corralation between Parke Bancorp and Mid Penn

Given the investment horizon of 90 days Parke Bancorp is expected to generate 0.86 times more return on investment than Mid Penn. However, Parke Bancorp is 1.16 times less risky than Mid Penn. It trades about -0.1 of its potential returns per unit of risk. Mid Penn Bancorp is currently generating about -0.11 per unit of risk. If you would invest  2,054  in Parke Bancorp on December 26, 2024 and sell it today you would lose (177.00) from holding Parke Bancorp or give up 8.62% of portfolio value over 90 days.

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

Parke Bancorp  vs.  Mid Penn Bancorp

Parke Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parke Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Mid Penn Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Penn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Parke Bancorp and Mid Penn

The main advantage of trading using opposite Parke Bancorp and Mid Penn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parke Bancorp 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.

The idea behind Parke Bancorp and Mid 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.