Correlation Between First Ottawa and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both First Ottawa 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 Ottawa 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 Ottawa Bancshares and Citizens Financial Corp, you can compare the effects of market volatilities on First Ottawa 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 Ottawa with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ottawa and Citizens Financial.
Diversification Opportunities for First Ottawa and Citizens Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Citizens is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Ottawa 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 Ottawa 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 Ottawa 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 Ottawa i.e., First Ottawa and Citizens Financial go up and down completely randomly.
Pair Corralation between First Ottawa and Citizens Financial
Given the investment horizon of 90 days First Ottawa Bancshares is expected to generate 4.5 times more return on investment than Citizens Financial. However, First Ottawa is 4.5 times more volatile than Citizens Financial Corp. It trades about 0.19 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.37 per unit of risk. If you would invest 13,025 in First Ottawa Bancshares on November 11, 2024 and sell it today you would earn a total of 1,475 from holding First Ottawa Bancshares or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 76.19% |
| Values | Daily Returns |
First Ottawa Bancshares vs. Citizens Financial Corp
Performance |
| Timeline |
| First Ottawa Bancshares |
| Citizens Financial Corp |
First Ottawa and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Ottawa and Citizens Financial
The main advantage of trading using opposite First Ottawa and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Ottawa 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 Ottawa vs. Century Next Financial | First Ottawa vs. Citizens Financial Corp | First Ottawa vs. Triad Business Bank | First Ottawa vs. First Bankers Trustshares |
| Citizens Financial vs. IF Bancorp | Citizens Financial vs. Home Bancorp | Citizens Financial vs. ConnectOne Bancorp | Citizens Financial vs. First Northwest 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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