Correlation Between Citizens Northern and Finward Bancorp
Can any of the company-specific risk be diversified away by investing in both Citizens Northern and Finward Bancorp 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 Finward Bancorp 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 Finward Bancorp, you can compare the effects of market volatilities on Citizens Northern and Finward Bancorp 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 Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Northern and Finward Bancorp.
Diversification Opportunities for Citizens Northern and Finward Bancorp
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citizens and Finward is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Northern Corp and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp 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 Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of Citizens Northern i.e., Citizens Northern and Finward Bancorp go up and down completely randomly.
Pair Corralation between Citizens Northern and Finward Bancorp
Given the investment horizon of 90 days Citizens Northern Corp is expected to under-perform the Finward Bancorp. In addition to that, Citizens Northern is 1.45 times more volatile than Finward Bancorp. It trades about -0.1 of its total potential returns per unit of risk. Finward Bancorp is currently generating about -0.05 per unit of volatility. If you would invest 3,100 in Finward Bancorp on September 13, 2024 and sell it today you would lose (33.00) from holding Finward Bancorp or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Northern Corp vs. Finward Bancorp
Performance |
| Timeline |
| Citizens Northern Corp |
| Finward Bancorp |
Citizens Northern and Finward Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Northern and Finward Bancorp
The main advantage of trading using opposite Citizens Northern and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Northern position performs unexpectedly, Finward Bancorp 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 Finward Bancorp will offset losses from the drop in Finward Bancorp's long position.| Citizens Northern vs. Penns Woods Bancorp | Citizens Northern vs. Chemung Financial Corp | Citizens Northern vs. Enterprise Bancorp |
| Finward Bancorp vs. Community West Bancshares | Finward Bancorp vs. First Financial Northwest | Finward Bancorp vs. Oak Valley Bancorp | Finward Bancorp vs. Home Federal 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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