Correlation Between Merchants Marine and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Merchants Marine 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 Merchants Marine and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merchants Marine Bancorp and Citizens Financial Corp, you can compare the effects of market volatilities on Merchants Marine 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 Merchants Marine with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants Marine and Citizens Financial.
Diversification Opportunities for Merchants Marine and Citizens Financial
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Merchants and Citizens is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Marine Bancorp 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 Merchants Marine 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 Merchants Marine 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 Corp has no effect on the direction of Merchants Marine i.e., Merchants Marine and Citizens Financial go up and down completely randomly.
Pair Corralation between Merchants Marine and Citizens Financial
Given the investment horizon of 90 days Merchants Marine Bancorp is expected to under-perform the Citizens Financial. But the otc stock apears to be less risky and, when comparing its historical volatility, Merchants Marine Bancorp is 1.63 times less risky than Citizens Financial. The otc stock trades about -0.02 of its potential returns per unit of risk. The Citizens Financial Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,812 in Citizens Financial Corp on September 3, 2024 and sell it today you would earn a total of 788.00 from holding Citizens Financial Corp or generate 43.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.21% |
| Values | Daily Returns |
Merchants Marine Bancorp vs. Citizens Financial Corp
Performance |
| Timeline |
| Merchants Marine Bancorp |
| Citizens Financial Corp |
Merchants Marine and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merchants Marine and Citizens Financial
The main advantage of trading using opposite Merchants Marine and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merchants Marine 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.| Merchants Marine vs. Mission Valley Bancorp | Merchants Marine vs. Harbor Bankshares | Merchants Marine vs. Oconee Financial | Merchants Marine vs. MF Bancorp |
| Citizens Financial vs. First Hawaiian | Citizens Financial vs. Central Pacific Financial | Citizens Financial vs. Territorial Bancorp | Citizens Financial vs. Comerica |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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