Correlation Between First Community and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both First Community 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 Community 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 Community Financial and Citizens Financial Corp, you can compare the effects of market volatilities on First Community 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 Community with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Citizens Financial.
Diversification Opportunities for First Community and Citizens Financial
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Citizens is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding First Community Financial 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 Community 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 Community Financial 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 Community i.e., First Community and Citizens Financial go up and down completely randomly.
Pair Corralation between First Community and Citizens Financial
Given the investment horizon of 90 days First Community Financial is expected to under-perform the Citizens Financial. In addition to that, First Community is 1.59 times more volatile than Citizens Financial Corp. It trades about -0.15 of its total potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.39 per unit of volatility. If you would invest 2,250 in Citizens Financial Corp on August 28, 2024 and sell it today you would earn a total of 350.00 from holding Citizens Financial Corp or generate 15.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Community Financial vs. Citizens Financial Corp
Performance |
| Timeline |
| First Community Financial |
| Citizens Financial Corp |
First Community and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Community and Citizens Financial
The main advantage of trading using opposite First Community and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Community 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 Community vs. CCSB Financial Corp | First Community vs. Bank of Utica | First Community vs. BEO Bancorp | First Community vs. First Community |
| Citizens Financial vs. Century Next Financial | Citizens Financial vs. Triad Business Bank | Citizens Financial vs. First Ottawa Bancshares | Citizens Financial vs. First Community Financial |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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