Correlation Between William Penn and Comerica

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

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

Diversification Opportunities for William Penn and Comerica

0.84

Correlation Coefficient

William Penn  Comerica

Very poor diversification

The 3 months correlation between William and Comerica is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Comerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comerica and William Penn 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 William Penn Bancorp are associated (or correlated) with Comerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comerica has no effect on the direction of William Penn i.e., William Penn and Comerica go up and down completely randomly.

Pair Corralation between William Penn and Comerica

Given the investment horizon of 90 days William Penn Bancorp is expected to under-perform the Comerica. But the stock apears to be less risky and, when comparing its historical volatility, William Penn Bancorp is 1.14 times less risky than Comerica. The stock trades about -0.09 of its potential returns per unit of risk. The Comerica is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,068  in Comerica on December 29, 2024 and sell it today you would lose (196.00) from holding Comerica or give up 3.23% of portfolio value over 90 days.

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

William Penn Bancorp  vs.  Comerica

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.

Comerica

Risk-Adjusted Performance

Very Weak

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

Pair Trading with William Penn and Comerica

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

The idea behind William Penn Bancorp and Comerica 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.