Correlation Between Oak Ridge and Citizens Bancorp

Can any of the company-specific risk be diversified away by investing in both Oak Ridge and Citizens Bancorp 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 Oak Ridge and Citizens Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oak Ridge Financial and Citizens Bancorp Investment, you can compare the effects of market volatilities on Oak Ridge and Citizens Bancorp 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 Oak Ridge with a short position of Citizens Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and Citizens Bancorp.

Diversification Opportunities for Oak Ridge and Citizens Bancorp

0.37

Correlation Coefficient

Oak Ridge  Citizens Bancorp

Weak diversification

The 3 months correlation between Oak and Citizens is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Financial and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv and Oak Ridge 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 Oak Ridge Financial are associated (or correlated) with Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of Oak Ridge i.e., Oak Ridge and Citizens Bancorp go up and down completely randomly.

Pair Corralation between Oak Ridge and Citizens Bancorp

Given the investment horizon of 90 days Oak Ridge is expected to generate 3.81 times less return on investment than Citizens Bancorp. But when comparing it to its historical volatility, Oak Ridge Financial is 1.74 times less risky than Citizens Bancorp. It trades about 0.14 of its potential returns per unit of risk. Citizens Bancorp Investment is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,400  in Citizens Bancorp Investment on September 21, 2024 and sell it today you would earn a total of  155.00  from holding Citizens Bancorp Investment or generate 6.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Oak Ridge Financial  vs.  Citizens Bancorp Investment

Oak Ridge Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Citizens Bancorp Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citizens Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Oak Ridge and Citizens Bancorp

The main advantage of trading using opposite Oak Ridge and Citizens Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Ridge position performs unexpectedly, Citizens Bancorp 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 Bancorp will offset losses from the drop in Citizens Bancorp's long position.

The idea behind Oak Ridge Financial and Citizens Bancorp Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.