Correlation Between Citizens Financial and Old Second
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Old Second 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 Citizens Financial and Old Second into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and Old Second Bancorp, you can compare the effects of market volatilities on Citizens Financial and Old Second 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 Citizens Financial with a short position of Old Second. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Old Second.
Diversification Opportunities for Citizens Financial and Old Second
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and Old is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Old Second Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Second Bancorp and Citizens 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 Citizens Financial Group are associated (or correlated) with Old Second. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Second Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Old Second go up and down completely randomly.
Pair Corralation between Citizens Financial and Old Second
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Old Second. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 2.29 times less risky than Old Second. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Old Second Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,692 in Old Second Bancorp on August 29, 2024 and sell it today you would earn a total of 177.00 from holding Old Second Bancorp or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Old Second Bancorp
Performance |
| Timeline |
| Citizens Financial |
| Old Second Bancorp |
Citizens Financial and Old Second Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Old Second
The main advantage of trading using opposite Citizens Financial and Old Second positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Old Second 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 Old Second will offset losses from the drop in Old Second's long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America | Citizens Financial vs. KeyCorp |
| Old Second vs. Ohio Valley Banc | Old Second vs. Peoples Bancorp | Old Second vs. OceanFirst Financial Corp | Old Second vs. QCR Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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