Correlation Between First Bancshares and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both First Bancshares 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 First Bancshares and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Bancshares and Citizens Financial Corp, you can compare the effects of market volatilities on First Bancshares 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 First Bancshares with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Bancshares and Citizens Financial.
Diversification Opportunities for First Bancshares and Citizens Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Citizens is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding First Bancshares and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp and First Bancshares 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 First Bancshares 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 Corp has no effect on the direction of First Bancshares i.e., First Bancshares and Citizens Financial go up and down completely randomly.
Pair Corralation between First Bancshares and Citizens Financial
Given the investment horizon of 90 days First Bancshares is expected to generate 1.24 times less return on investment than Citizens Financial. But when comparing it to its historical volatility, First Bancshares is 1.69 times less risky than Citizens Financial. It trades about 0.07 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,704 in Citizens Financial Corp on August 24, 2024 and sell it today you would earn a total of 796.00 from holding Citizens Financial Corp or generate 46.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 46.49% |
| Values | Daily Returns |
First Bancshares vs. Citizens Financial Corp
Performance |
| Timeline |
| First Bancshares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Citizens Financial Corp |
First Bancshares and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Bancshares and Citizens Financial
The main advantage of trading using opposite First Bancshares and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bancshares 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.| First Bancshares vs. Lewis Clark Bancorp | First Bancshares vs. Bank of Idaho | First Bancshares vs. Community Heritage Financial | First Bancshares vs. National Capital Bank |
| Citizens Financial vs. Nedbank Group | Citizens Financial vs. Standard Bank Group | Citizens Financial vs. Bank Central Asia | Citizens Financial vs. PSB Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |