Correlation Between Woodlands Financial and WCF Bancorp

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

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

Diversification Opportunities for Woodlands Financial and WCF Bancorp

0.11

Correlation Coefficient

Woodlands Financial  WCF Bancorp

Average diversification

The 3 months correlation between Woodlands and WCF is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Woodlands Financial Services and WCF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WCF Bancorp and Woodlands 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 Woodlands Financial Services are associated (or correlated) with WCF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WCF Bancorp has no effect on the direction of Woodlands Financial i.e., Woodlands Financial and WCF Bancorp go up and down completely randomly.

Pair Corralation between Woodlands Financial and WCF Bancorp

If you would invest  1,884  in Woodlands Financial Services on October 5, 2024 and sell it today you would earn a total of  116.00  from holding Woodlands Financial Services or generate 6.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.47%
Values	Daily Returns

Woodlands Financial Services  vs.  WCF Bancorp

Woodlands Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

WCF Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WCF Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, WCF Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Woodlands Financial and WCF Bancorp

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

The idea behind Woodlands Financial Services and WCF 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.