Correlation Between Truist Financial and William Penn

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

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

Diversification Opportunities for Truist Financial and William Penn

0.62

Correlation Coefficient

Truist Financial  William Penn

Poor diversification

The 3 months correlation between Truist and William is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and William Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Penn Bancorp and Truist Financial 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 Truist Financial are associated (or correlated) with William Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Penn Bancorp has no effect on the direction of Truist Financial i.e., Truist Financial and William Penn go up and down completely randomly.

Pair Corralation between Truist Financial and William Penn

Assuming the 90 days trading horizon Truist Financial is expected to generate 1.75 times less return on investment than William Penn. But when comparing it to its historical volatility, Truist Financial is 1.46 times less risky than William Penn. It trades about 0.05 of its potential returns per unit of risk. William Penn Bancorp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  900.00  in William Penn Bancorp on December 1, 2024 and sell it today you would earn a total of  301.00  from holding William Penn Bancorp or generate 33.44% return on investment over 90 days.

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

Truist Financial  vs.  William Penn Bancorp

Truist Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Truist Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

William Penn Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Penn Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators 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 Truist Financial and William Penn

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

The idea behind Truist Financial and William 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.