Correlation Between WVS Financial and Parkway Acquisition

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

By analyzing existing cross correlation between WVS Financial Corp and Parkway Acquisition Corp, you can compare the effects of market volatilities on WVS Financial and Parkway Acquisition 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 WVS Financial with a short position of Parkway Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of WVS Financial and Parkway Acquisition.

Diversification Opportunities for WVS Financial and Parkway Acquisition

-0.31

Correlation Coefficient

WVS Financial  Parkway Acquisition

Very good diversification

The 3 months correlation between WVS and Parkway is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding WVS Financial Corp and Parkway Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkway Acquisition Corp and WVS Financial 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 WVS Financial Corp are associated (or correlated) with Parkway Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkway Acquisition Corp has no effect on the direction of WVS Financial i.e., WVS Financial and Parkway Acquisition go up and down completely randomly.

Pair Corralation between WVS Financial and Parkway Acquisition

If you would invest  1,079  in Parkway Acquisition Corp on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Parkway Acquisition Corp or generate 0.0% return on investment over 90 days.

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

WVS Financial Corp  vs.  Parkway Acquisition Corp

WVS Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WVS Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, WVS Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Parkway Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parkway Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Parkway Acquisition is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WVS Financial and Parkway Acquisition

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

The idea behind WVS Financial Corp and Parkway Acquisition Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.