Correlation Between Citizens Northern and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Citizens Northern and Dow Jones 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 Northern and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Northern Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Citizens Northern and Dow Jones 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 Northern with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Northern and Dow Jones.
Diversification Opportunities for Citizens Northern and Dow Jones
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Dow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Northern Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Citizens Northern 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 Northern Corp are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Citizens Northern i.e., Citizens Northern and Dow Jones go up and down completely randomly.
Pair Corralation between Citizens Northern and Dow Jones
Given the investment horizon of 90 days Citizens Northern is expected to generate 2.13 times less return on investment than Dow Jones. In addition to that, Citizens Northern is 2.5 times more volatile than Dow Jones Industrial. It trades about 0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of volatility. If you would invest 4,133,505 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 338,701 from holding Dow Jones Industrial or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Northern Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Citizens Northern and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Citizens Northern Corp
Pair trading matchups for Citizens Northern
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Citizens Northern and Dow Jones
The main advantage of trading using opposite Citizens Northern and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Northern position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Citizens Northern vs. Penns Woods Bancorp | Citizens Northern vs. Chemung Financial Corp | Citizens Northern vs. Enterprise Bancorp |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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