Correlation Between William Penn and HomeStreet

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

Diversification Opportunities for William Penn and HomeStreet

-0.71

Correlation Coefficient

William Penn  HomeStreet

Pay attention - limited upside

The 3 months correlation between William and HomeStreet is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding William Penn Bancorp and HomeStreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeStreet 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 HomeStreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeStreet has no effect on the direction of William Penn i.e., William Penn and HomeStreet go up and down completely randomly.

Pair Corralation between William Penn and HomeStreet

Given the investment horizon of 90 days William Penn Bancorp is expected to generate 0.25 times more return on investment than HomeStreet. However, William Penn Bancorp is 3.98 times less risky than HomeStreet. It trades about 0.12 of its potential returns per unit of risk. HomeStreet is currently generating about -0.03 per unit of risk. If you would invest  1,177  in William Penn Bancorp on September 5, 2024 and sell it today you would earn a total of  121.00  from holding William Penn Bancorp or generate 10.28% 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.  HomeStreet

William Penn Bancorp

Risk-Adjusted Performance

9 of 100

OK

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 unsteady basic indicators, William Penn may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HomeStreet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeStreet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with William Penn and HomeStreet

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

The idea behind William Penn Bancorp and HomeStreet 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.

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 CEOs Directory module to screen CEOs from public companies around the world.