Correlation Between Penns Woods and Mifflinburg Bancorp

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

Diversification Opportunities for Penns Woods and Mifflinburg Bancorp

0.39

Correlation Coefficient

Penns Woods  Mifflinburg Bancorp

Weak diversification

The 3 months correlation between Penns and Mifflinburg is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and Mifflinburg Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mifflinburg 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 Mifflinburg Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mifflinburg Bancorp has no effect on the direction of Penns Woods i.e., Penns Woods and Mifflinburg Bancorp go up and down completely randomly.

Pair Corralation between Penns Woods and Mifflinburg Bancorp

Given the investment horizon of 90 days Penns Woods Bancorp is expected to under-perform the Mifflinburg Bancorp. In addition to that, Penns Woods is 1.39 times more volatile than Mifflinburg Bancorp. It trades about -0.05 of its total potential returns per unit of risk. Mifflinburg Bancorp is currently generating about 0.03 per unit of volatility. If you would invest  2,355  in Mifflinburg Bancorp on December 30, 2024 and sell it today you would earn a total of  45.00  from holding Mifflinburg Bancorp or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Penns Woods Bancorp  vs.  Mifflinburg 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.

Mifflinburg Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mifflinburg Bancorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Mifflinburg Bancorp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Penns Woods and Mifflinburg Bancorp

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

The idea behind Penns Woods Bancorp and Mifflinburg 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.