Correlation Between Citizens Financial and Carter Bank
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Carter Bank 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 Carter Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Services and Carter Bank and, you can compare the effects of market volatilities on Citizens Financial and Carter Bank 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 Carter Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Carter Bank.
Diversification Opportunities for Citizens Financial and Carter Bank
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Carter is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Services and Carter Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carter 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 Services are associated (or correlated) with Carter Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carter Bank has no effect on the direction of Citizens Financial i.e., Citizens Financial and Carter Bank go up and down completely randomly.
Pair Corralation between Citizens Financial and Carter Bank
Given the investment horizon of 90 days Citizens Financial Services is expected to generate 1.69 times more return on investment than Carter Bank. However, Citizens Financial is 1.69 times more volatile than Carter Bank and. It trades about 0.04 of its potential returns per unit of risk. Carter Bank and is currently generating about 0.06 per unit of risk. If you would invest 5,968 in Citizens Financial Services on September 3, 2024 and sell it today you would earn a total of 1,093 from holding Citizens Financial Services or generate 18.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Services vs. Carter Bank and
Performance |
| Timeline |
| Citizens Financial |
| Carter Bank |
Citizens Financial and Carter Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Carter Bank
The main advantage of trading using opposite Citizens Financial and Carter Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Carter Bank 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 Carter Bank will offset losses from the drop in Carter Bank's long position.| Citizens Financial vs. Home Federal Bancorp | Citizens Financial vs. Community West Bancshares | Citizens Financial vs. Magyar Bancorp | Citizens Financial vs. Finward Bancorp |
| Carter Bank vs. Home Bancorp | Carter Bank vs. Community West Bancshares | Carter Bank vs. First Community | Carter Bank vs. Great Southern Bancorp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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