Correlation Between Prosperity Bancshares and Citizens Holding
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares 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 Prosperity Bancshares and Citizens Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Citizens Holding, you can compare the effects of market volatilities on Prosperity Bancshares 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 Prosperity Bancshares with a short position of Citizens Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Citizens Holding.
Diversification Opportunities for Prosperity Bancshares and Citizens Holding
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prosperity and Citizens is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Citizens Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Holding and Prosperity 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 Prosperity Bancshares 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 Prosperity Bancshares i.e., Prosperity Bancshares and Citizens Holding go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Citizens Holding
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 0.75 times more return on investment than Citizens Holding. However, Prosperity Bancshares is 1.33 times less risky than Citizens Holding. It trades about 0.03 of its potential returns per unit of risk. Citizens Holding is currently generating about -0.02 per unit of risk. If you would invest 6,739 in Prosperity Bancshares on August 24, 2024 and sell it today you would earn a total of 1,495 from holding Prosperity Bancshares or generate 22.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 32.06% |
| Values | Daily Returns |
Prosperity Bancshares vs. Citizens Holding
Performance |
| Timeline |
| Prosperity Bancshares |
| Citizens Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Prosperity Bancshares and Citizens Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Citizens Holding
The main advantage of trading using opposite Prosperity Bancshares and Citizens Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares 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.| Prosperity Bancshares vs. Banco Bradesco SA | Prosperity Bancshares vs. Itau Unibanco Banco | Prosperity Bancshares vs. Banco Santander Brasil | Prosperity Bancshares vs. Western Alliance Bancorporation |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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