Correlation Between Penns Woods and Auxly Cannabis

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

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

Diversification Opportunities for Penns Woods and Auxly Cannabis

-0.5

Correlation Coefficient

Penns Woods  Auxly Cannabis

Very good diversification

The 3 months correlation between Penns and Auxly is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and Auxly Cannabis Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxly Cannabis Group and Penns Woods 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 Penns Woods Bancorp are associated (or correlated) with Auxly Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxly Cannabis Group has no effect on the direction of Penns Woods i.e., Penns Woods and Auxly Cannabis go up and down completely randomly.

Pair Corralation between Penns Woods and Auxly Cannabis

Given the investment horizon of 90 days Penns Woods Bancorp is expected to generate 0.36 times more return on investment than Auxly Cannabis. However, Penns Woods Bancorp is 2.78 times less risky than Auxly Cannabis. It trades about -0.08 of its potential returns per unit of risk. Auxly Cannabis Group is currently generating about -0.05 per unit of risk. If you would invest  3,193  in Penns Woods Bancorp on October 1, 2024 and sell it today you would lose (154.00) from holding Penns Woods Bancorp or give up 4.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Penns Woods Bancorp  vs.  Auxly Cannabis Group

Penns Woods Bancorp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Penns Woods Bancorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Penns Woods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Auxly Cannabis Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auxly Cannabis Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Auxly Cannabis may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Penns Woods and Auxly Cannabis

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

The idea behind Penns Woods Bancorp and Auxly Cannabis Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.