Correlation Between William Penn and CullenFrost Bankers

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

Diversification Opportunities for William Penn and CullenFrost Bankers

-0.75

Correlation Coefficient

William Penn  CullenFrost Bankers

Pay attention - limited upside

The 3 months correlation between William and CullenFrost is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and CullenFrost Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CullenFrost Bankers 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 CullenFrost Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CullenFrost Bankers has no effect on the direction of William Penn i.e., William Penn and CullenFrost Bankers go up and down completely randomly.

Pair Corralation between William Penn and CullenFrost Bankers

Given the investment horizon of 90 days William Penn Bancorp is expected to generate 1.48 times more return on investment than CullenFrost Bankers. However, William Penn is 1.48 times more volatile than CullenFrost Bankers. It trades about 0.15 of its potential returns per unit of risk. CullenFrost Bankers is currently generating about -0.11 per unit of risk. If you would invest  1,239  in William Penn Bancorp on September 4, 2024 and sell it today you would earn a total of  59.00  from holding William Penn Bancorp or generate 4.76% return on investment over 90 days.

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

William Penn Bancorp  vs.  CullenFrost Bankers

William Penn Bancorp

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Penn Bancorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, William Penn may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CullenFrost Bankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CullenFrost Bankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with William Penn and CullenFrost Bankers

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

The idea behind William Penn Bancorp and CullenFrost Bankers 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.