Correlation Between Citizens Financial and Washington Business
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Washington Business 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 Washington Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Corp and Washington Business Bank, you can compare the effects of market volatilities on Citizens Financial and Washington Business 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 Washington Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Washington Business.
Diversification Opportunities for Citizens Financial and Washington Business
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Washington is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and Washington Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Business Bank 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 Corp are associated (or correlated) with Washington Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Business Bank has no effect on the direction of Citizens Financial i.e., Citizens Financial and Washington Business go up and down completely randomly.
Pair Corralation between Citizens Financial and Washington Business
Given the investment horizon of 90 days Citizens Financial Corp is expected to generate 2.2 times more return on investment than Washington Business. However, Citizens Financial is 2.2 times more volatile than Washington Business Bank. It trades about 0.08 of its potential returns per unit of risk. Washington Business Bank is currently generating about 0.11 per unit of risk. If you would invest 1,960 in Citizens Financial Corp on August 28, 2024 and sell it today you would earn a total of 640.00 from holding Citizens Financial Corp or generate 32.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.34% |
| Values | Daily Returns |
Citizens Financial Corp vs. Washington Business Bank
Performance |
| Timeline |
| Citizens Financial Corp |
| Washington Business Bank |
Citizens Financial and Washington Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Washington Business
The main advantage of trading using opposite Citizens Financial and Washington Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Washington Business 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 Washington Business will offset losses from the drop in Washington Business' long position.| Citizens Financial vs. Century Next Financial | Citizens Financial vs. Triad Business Bank | Citizens Financial vs. First Ottawa Bancshares | Citizens Financial vs. First Community Financial |
| Washington Business vs. National Capital Bank | Washington Business vs. Community Heritage Financial | Washington Business vs. Citizens Financial Corp | Washington Business vs. Bank of Idaho |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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