Correlation Between Virginia National and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Virginia National 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 Virginia National and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virginia National Bankshares and Citizens Financial Services, you can compare the effects of market volatilities on Virginia National 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 Virginia National with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virginia National and Citizens Financial.
Diversification Opportunities for Virginia National and Citizens Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virginia and Citizens is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Virginia National Bankshares and Citizens Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and Virginia National 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 Virginia National Bankshares 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 has no effect on the direction of Virginia National i.e., Virginia National and Citizens Financial go up and down completely randomly.
Pair Corralation between Virginia National and Citizens Financial
Given the investment horizon of 90 days Virginia National Bankshares is expected to under-perform the Citizens Financial. But the stock apears to be less risky and, when comparing its historical volatility, Virginia National Bankshares is 1.47 times less risky than Citizens Financial. The stock trades about -0.22 of its potential returns per unit of risk. The Citizens Financial Services is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 6,618 in Citizens Financial Services on October 21, 2024 and sell it today you would lose (382.00) from holding Citizens Financial Services or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virginia National Bankshares vs. Citizens Financial Services
Performance |
| Timeline |
| Virginia National |
| Citizens Financial |
Virginia National and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virginia National and Citizens Financial
The main advantage of trading using opposite Virginia National and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virginia National 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.| Virginia National vs. Finward Bancorp | Virginia National vs. Community West Bancshares | Virginia National vs. First Financial Northwest | Virginia National vs. Oak Valley Bancorp |
| Citizens Financial vs. Home Federal Bancorp | Citizens Financial vs. Community West Bancshares | Citizens Financial vs. Magyar Bancorp | Citizens Financial vs. Finward 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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