Correlation Between Bank of San Francisco and Citizens Bancorp
Can any of the company-specific risk be diversified away by investing in both Bank of San Francisco 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 Bank of San Francisco and Citizens Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of San and Citizens Bancorp of, you can compare the effects of market volatilities on Bank of San Francisco 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 Bank of San Francisco with a short position of Citizens Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of San Francisco and Citizens Bancorp.
Diversification Opportunities for Bank of San Francisco and Citizens Bancorp
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Citizens is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank of San and Citizens Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp and Bank of San Francisco 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 Bank of San 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 has no effect on the direction of Bank of San Francisco i.e., Bank of San Francisco and Citizens Bancorp go up and down completely randomly.
Pair Corralation between Bank of San Francisco and Citizens Bancorp
Given the investment horizon of 90 days Bank of San is expected to generate 0.81 times more return on investment than Citizens Bancorp. However, Bank of San is 1.24 times less risky than Citizens Bancorp. It trades about 0.08 of its potential returns per unit of risk. Citizens Bancorp of is currently generating about -0.05 per unit of risk. If you would invest 3,015 in Bank of San on December 1, 2024 and sell it today you would earn a total of 160.00 from holding Bank of San or generate 5.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 81.67% |
Values | Daily Returns |
Bank of San vs. Citizens Bancorp of
Performance |
Timeline |
Bank of San Francisco |
Citizens Bancorp |
Bank of San Francisco and Citizens Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of San Francisco and Citizens Bancorp
The main advantage of trading using opposite Bank of San Francisco and Citizens Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of San Francisco 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.Bank of San Francisco vs. Pioneer Bankcorp | Bank of San Francisco vs. Liberty Northwest Bancorp | Bank of San Francisco vs. Summit Bancshares | Bank of San Francisco vs. National Capital Bank |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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