Correlation Between William Penn and Finward Bancorp

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

Diversification Opportunities for William Penn and Finward Bancorp

-0.74

Correlation Coefficient

William Penn  Finward Bancorp

Pay attention - limited upside

The 3 months correlation between William and Finward is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp 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 Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of William Penn i.e., William Penn and Finward Bancorp go up and down completely randomly.

Pair Corralation between William Penn and Finward Bancorp

Given the investment horizon of 90 days William Penn Bancorp is expected to under-perform the Finward Bancorp. In addition to that, William Penn is 1.15 times more volatile than Finward Bancorp. It trades about -0.08 of its total potential returns per unit of risk. Finward Bancorp is currently generating about 0.04 per unit of volatility. If you would invest  2,818  in Finward Bancorp on December 29, 2024 and sell it today you would earn a total of  92.00  from holding Finward Bancorp or generate 3.26% return on investment over 90 days.

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

William Penn Bancorp  vs.  Finward Bancorp

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.

Finward Bancorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finward Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Finward Bancorp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with William Penn and Finward Bancorp

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

The idea behind William Penn Bancorp and Finward 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.