Correlation Between William Penn and Ottawa Savings

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

Diversification Opportunities for William Penn and Ottawa Savings

0.2

Correlation Coefficient

William Penn  Ottawa Savings

Modest diversification

The 3 months correlation between William and Ottawa is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Ottawa Savings Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ottawa Savings 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 Ottawa Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ottawa Savings Bancorp has no effect on the direction of William Penn i.e., William Penn and Ottawa Savings go up and down completely randomly.

Pair Corralation between William Penn and Ottawa Savings

If you would invest  1,232  in William Penn Bancorp on October 19, 2024 and sell it today you would lose (17.00) from holding William Penn Bancorp or give up 1.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

William Penn Bancorp  vs.  Ottawa Savings Bancorp

William Penn Bancorp

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, William Penn is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Ottawa Savings Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ottawa Savings Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ottawa Savings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with William Penn and Ottawa Savings

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

The idea behind William Penn Bancorp and Ottawa Savings 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.

Check out your portfolio center.

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.