Correlation Between Penns Woods and Treatt Plc
Can any of the company-specific risk be diversified away by investing in both Penns Woods and Treatt Plc 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 Treatt Plc 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 Treatt plc, you can compare the effects of market volatilities on Penns Woods and Treatt Plc 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 Treatt Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and Treatt Plc.
Diversification Opportunities for Penns Woods and Treatt Plc
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Penns and Treatt is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and Treatt plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treatt plc 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 Treatt Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treatt plc has no effect on the direction of Penns Woods i.e., Penns Woods and Treatt Plc go up and down completely randomly.
Pair Corralation between Penns Woods and Treatt Plc
Given the investment horizon of 90 days Penns Woods Bancorp is expected to generate 0.57 times more return on investment than Treatt Plc. However, Penns Woods Bancorp is 1.75 times less risky than Treatt Plc. It trades about 0.2 of its potential returns per unit of risk. Treatt plc is currently generating about 0.05 per unit of risk. If you would invest 2,368 in Penns Woods Bancorp on September 26, 2024 and sell it today you would earn a total of 686.00 from holding Penns Woods Bancorp or generate 28.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Penns Woods Bancorp vs. Treatt plc
Performance |
Timeline |
Penns Woods Bancorp |
Treatt plc |
Penns Woods and Treatt Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penns Woods and Treatt Plc
The main advantage of trading using opposite Penns Woods and Treatt Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penns Woods position performs unexpectedly, Treatt Plc 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 Treatt Plc will offset losses from the drop in Treatt Plc's long position.Penns Woods vs. 1st Source | Penns Woods vs. Great Southern Bancorp | Penns Woods vs. Waterstone Financial | Penns Woods vs. First Community |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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