Correlation Between Croghan Bancshares and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Croghan Bancshares and Citizens Financial 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 Croghan Bancshares and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Croghan Bancshares and Citizens Financial Corp, you can compare the effects of market volatilities on Croghan Bancshares and Citizens Financial 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 Croghan Bancshares with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Croghan Bancshares and Citizens Financial.
Diversification Opportunities for Croghan Bancshares and Citizens Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Croghan and Citizens is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Croghan Bancshares and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp and Croghan Bancshares 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 Croghan Bancshares are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Corp has no effect on the direction of Croghan Bancshares i.e., Croghan Bancshares and Citizens Financial go up and down completely randomly.
Pair Corralation between Croghan Bancshares and Citizens Financial
Given the investment horizon of 90 days Croghan Bancshares is expected to generate 4.09 times less return on investment than Citizens Financial. But when comparing it to its historical volatility, Croghan Bancshares is 2.08 times less risky than Citizens Financial. It trades about 0.04 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,808 in Citizens Financial Corp on September 3, 2024 and sell it today you would earn a total of 792.00 from holding Citizens Financial Corp or generate 43.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.65% |
| Values | Daily Returns |
Croghan Bancshares vs. Citizens Financial Corp
Performance |
| Timeline |
| Croghan Bancshares |
| Citizens Financial Corp |
Croghan Bancshares and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Croghan Bancshares and Citizens Financial
The main advantage of trading using opposite Croghan Bancshares and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Croghan Bancshares position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Croghan Bancshares vs. PGE Corp | Croghan Bancshares vs. Empresa Distribuidora y | Croghan Bancshares vs. Artisan Partners Asset | Croghan Bancshares vs. WEC Energy Group |
| Citizens Financial vs. First Hawaiian | Citizens Financial vs. Central Pacific Financial | Citizens Financial vs. Territorial Bancorp | Citizens Financial vs. Comerica |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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