Correlation Between ESSA Bancorp and Citizens Holding
Can any of the company-specific risk be diversified away by investing in both ESSA Bancorp and Citizens Holding 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 ESSA Bancorp and Citizens Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSA Bancorp and Citizens Holding, you can compare the effects of market volatilities on ESSA Bancorp and Citizens Holding 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 ESSA Bancorp with a short position of Citizens Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSA Bancorp and Citizens Holding.
Diversification Opportunities for ESSA Bancorp and Citizens Holding
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ESSA and Citizens is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ESSA Bancorp and Citizens Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Holding and ESSA 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 ESSA Bancorp are associated (or correlated) with Citizens Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Holding has no effect on the direction of ESSA Bancorp i.e., ESSA Bancorp and Citizens Holding go up and down completely randomly.
Pair Corralation between ESSA Bancorp and Citizens Holding
Given the investment horizon of 90 days ESSA Bancorp is expected to generate 0.97 times more return on investment than Citizens Holding. However, ESSA Bancorp is 1.03 times less risky than Citizens Holding. It trades about 0.01 of its potential returns per unit of risk. Citizens Holding is currently generating about -0.02 per unit of risk. If you would invest 1,974 in ESSA Bancorp on August 28, 2024 and sell it today you would earn a total of 77.00 from holding ESSA Bancorp or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.72% |
| Values | Daily Returns |
ESSA Bancorp vs. Citizens Holding
Performance |
| Timeline |
| ESSA Bancorp |
| Citizens Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ESSA Bancorp and Citizens Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSA Bancorp and Citizens Holding
The main advantage of trading using opposite ESSA Bancorp and Citizens Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSA Bancorp position performs unexpectedly, Citizens Holding 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 Holding will offset losses from the drop in Citizens Holding's long position.| ESSA Bancorp vs. Fifth Third Bancorp | ESSA Bancorp vs. Zions Bancorporation | ESSA Bancorp vs. Huntington Bancshares Incorporated | ESSA Bancorp vs. Comerica |
| Citizens Holding vs. Home Federal Bancorp | Citizens Holding vs. Lake Shore Bancorp | Citizens Holding vs. Community West Bancshares | Citizens Holding vs. Magyar 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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