Correlation Between ECB Bancorp and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both ECB Bancorp and Citizens Financial 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 ECB Bancorp and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECB Bancorp and Citizens Financial Group,, you can compare the effects of market volatilities on ECB Bancorp and Citizens Financial 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 ECB Bancorp with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECB Bancorp and Citizens Financial.
Diversification Opportunities for ECB Bancorp and Citizens Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ECB and Citizens is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ECB Bancorp and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, and ECB Bancorp 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 ECB Bancorp are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of ECB Bancorp i.e., ECB Bancorp and Citizens Financial go up and down completely randomly.
Pair Corralation between ECB Bancorp and Citizens Financial
Given the investment horizon of 90 days ECB Bancorp is expected to under-perform the Citizens Financial. In addition to that, ECB Bancorp is 2.84 times more volatile than Citizens Financial Group,. It trades about -0.04 of its total potential returns per unit of risk. Citizens Financial Group, is currently generating about -0.08 per unit of volatility. If you would invest 2,712 in Citizens Financial Group, on August 30, 2024 and sell it today you would lose (21.00) from holding Citizens Financial Group, or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECB Bancorp vs. Citizens Financial Group,
Performance |
| Timeline |
| ECB Bancorp |
| Citizens Financial Group, |
ECB Bancorp and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECB Bancorp and Citizens Financial
The main advantage of trading using opposite ECB Bancorp and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECB Bancorp position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| ECB Bancorp vs. Home Federal Bancorp | ECB Bancorp vs. Magyar Bancorp | ECB Bancorp vs. Community West Bancshares | ECB Bancorp vs. Lake Shore Bancorp |
| Citizens Financial vs. Celsius Holdings | Citizens Financial vs. Modine Manufacturing | Citizens Financial vs. BRP Inc | Citizens Financial vs. Lifevantage |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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