Correlation Between Penns Woods and Freegold Ventures

Can any of the company-specific risk be diversified away by investing in both Penns Woods and Freegold Ventures 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 Penns Woods and Freegold Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Penns Woods Bancorp and Freegold Ventures Limited, you can compare the effects of market volatilities on Penns Woods and Freegold Ventures 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 Penns Woods with a short position of Freegold Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and Freegold Ventures.

Diversification Opportunities for Penns Woods and Freegold Ventures

-0.91

Correlation Coefficient

Penns Woods  Freegold Ventures

Pay attention - limited upside

The 3 months correlation between Penns and Freegold is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and Freegold Ventures Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freegold Ventures and Penns Woods 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 Penns Woods Bancorp are associated (or correlated) with Freegold Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freegold Ventures has no effect on the direction of Penns Woods i.e., Penns Woods and Freegold Ventures go up and down completely randomly.

Pair Corralation between Penns Woods and Freegold Ventures

Given the investment horizon of 90 days Penns Woods Bancorp is expected to generate 0.55 times more return on investment than Freegold Ventures. However, Penns Woods Bancorp is 1.81 times less risky than Freegold Ventures. It trades about 0.2 of its potential returns per unit of risk. Freegold Ventures Limited is currently generating about -0.23 per unit of risk. If you would invest  2,356  in Penns Woods Bancorp on September 30, 2024 and sell it today you would earn a total of  683.00  from holding Penns Woods Bancorp or generate 28.99% return on investment over 90 days.

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

Penns Woods Bancorp  vs.  Freegold Ventures Limited

Penns Woods Bancorp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Penns Woods Bancorp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Penns Woods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Freegold Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freegold Ventures Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Penns Woods and Freegold Ventures

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

The idea behind Penns Woods Bancorp and Freegold Ventures Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.