Correlation Between William Penn and Univest Pennsylvania

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

Diversification Opportunities for William Penn and Univest Pennsylvania

0.82

Correlation Coefficient

William Penn  Univest Pennsylvania

Very poor diversification

The 3 months correlation between William and Univest is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and Univest Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univest Pennsylvania 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 Univest Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univest Pennsylvania has no effect on the direction of William Penn i.e., William Penn and Univest Pennsylvania go up and down completely randomly.

Pair Corralation between William Penn and Univest Pennsylvania

Given the investment horizon of 90 days William Penn Bancorp is expected to under-perform the Univest Pennsylvania. But the stock apears to be less risky and, when comparing its historical volatility, William Penn Bancorp is 1.08 times less risky than Univest Pennsylvania. The stock trades about -0.1 of its potential returns per unit of risk. The Univest Pennsylvania is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,175  in Univest Pennsylvania on November 30, 2024 and sell it today you would lose (140.00) from holding Univest Pennsylvania or give up 4.41% 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.  Univest Pennsylvania

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.

Univest Pennsylvania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Univest Pennsylvania has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Univest Pennsylvania is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with William Penn and Univest Pennsylvania

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

The idea behind William Penn Bancorp and Univest Pennsylvania 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.