Correlation Between Penns Woods and CCFNB Bancorp

Can any of the company-specific risk be diversified away by investing in both Penns Woods and CCFNB 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 Penns Woods and CCFNB Bancorp 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 CCFNB Bancorp, you can compare the effects of market volatilities on Penns Woods and CCFNB 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 Penns Woods with a short position of CCFNB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and CCFNB Bancorp.

Diversification Opportunities for Penns Woods and CCFNB Bancorp

0.03

Correlation Coefficient

Penns Woods  CCFNB Bancorp

Significant diversification

The 3 months correlation between Penns and CCFNB is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and CCFNB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCFNB Bancorp 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 CCFNB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCFNB Bancorp has no effect on the direction of Penns Woods i.e., Penns Woods and CCFNB Bancorp go up and down completely randomly.

Pair Corralation between Penns Woods and CCFNB Bancorp

Given the investment horizon of 90 days Penns Woods Bancorp is expected to under-perform the CCFNB Bancorp. But the stock apears to be less risky and, when comparing its historical volatility, Penns Woods Bancorp is 1.17 times less risky than CCFNB Bancorp. The stock trades about -0.02 of its potential returns per unit of risk. The CCFNB Bancorp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,086  in CCFNB Bancorp on December 28, 2024 and sell it today you would earn a total of  64.00  from holding CCFNB Bancorp or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Penns Woods Bancorp  vs.  CCFNB Bancorp

Penns Woods Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penns Woods Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Penns Woods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CCFNB Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CCFNB Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, CCFNB Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Penns Woods and CCFNB Bancorp

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

The idea behind Penns Woods Bancorp and CCFNB 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.