Correlation Between Citizens Financial and Home Federal
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Home Federal 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 Home Federal 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 Home Federal Bancorp, you can compare the effects of market volatilities on Citizens Financial and Home Federal 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 Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Home Federal.
Diversification Opportunities for Citizens Financial and Home Federal
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citizens and Home is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Services and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal 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 Services are associated (or correlated) with Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Home Federal go up and down completely randomly.
Pair Corralation between Citizens Financial and Home Federal
Given the investment horizon of 90 days Citizens Financial Services is expected to generate 1.83 times more return on investment than Home Federal. However, Citizens Financial is 1.83 times more volatile than Home Federal Bancorp. It trades about 0.23 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.05 per unit of risk. If you would invest 5,829 in Citizens Financial Services on September 1, 2024 and sell it today you would earn a total of 1,232 from holding Citizens Financial Services or generate 21.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Citizens Financial Services vs. Home Federal Bancorp
Performance |
| Timeline |
| Citizens Financial |
| Home Federal Bancorp |
Citizens Financial and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Home Federal
The main advantage of trading using opposite Citizens Financial and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Home Federal 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 Home Federal will offset losses from the drop in Home Federal'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 |
| Home Federal vs. Affinity Bancshares | Home Federal vs. Southern California Bancorp | Home Federal vs. Auburn National Bancorporation | Home Federal vs. BayCom Corp |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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