Correlation Between Parke Bancorp and Peoples Bancorp

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

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

Diversification Opportunities for Parke Bancorp and Peoples Bancorp

0.83

Correlation Coefficient

Parke Bancorp  Peoples Bancorp

Very poor diversification

The 3 months correlation between Parke and Peoples is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Parke Bancorp and Peoples Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples 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 Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of Parke Bancorp i.e., Parke Bancorp and Peoples Bancorp go up and down completely randomly.

Pair Corralation between Parke Bancorp and Peoples Bancorp

Given the investment horizon of 90 days Parke Bancorp is expected to under-perform the Peoples Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Parke Bancorp is 1.08 times less risky than Peoples Bancorp. The stock trades about -0.22 of its potential returns per unit of risk. The Peoples Bancorp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  3,465  in Peoples Bancorp on November 28, 2024 and sell it today you would lose (296.00) from holding Peoples Bancorp or give up 8.54% of portfolio value over 90 days.

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

Parke Bancorp  vs.  Peoples 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 fragile performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Peoples Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peoples Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers 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 Parke Bancorp and Peoples Bancorp

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

The idea behind Parke Bancorp and Peoples 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..