Correlation Between William Penn and Parke Bancorp

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

Diversification Opportunities for William Penn and Parke Bancorp

0.79

Correlation Coefficient

William Penn  Parke Bancorp

Poor diversification

The 3 months correlation between William and Parke is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Parke Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parke 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 Parke Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parke Bancorp has no effect on the direction of William Penn i.e., William Penn and Parke Bancorp go up and down completely randomly.

Pair Corralation between William Penn and Parke Bancorp

Given the investment horizon of 90 days William Penn Bancorp is expected to under-perform the Parke Bancorp. In addition to that, William Penn is 1.18 times more volatile than Parke Bancorp. It trades about -0.09 of its total potential returns per unit of risk. Parke Bancorp is currently generating about -0.09 per unit of volatility. If you would invest  2,049  in Parke Bancorp on December 28, 2024 and sell it today you would lose (156.00) from holding Parke Bancorp or give up 7.61% of portfolio value over 90 days.

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

William Penn Bancorp  vs.  Parke 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.

Parke Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Parke Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with William Penn and Parke Bancorp

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

The idea behind William Penn Bancorp and Parke 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.