Correlation Between Citizens Bancorp and Oak Ridge

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

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

Diversification Opportunities for Citizens Bancorp and Oak Ridge

0.6

Correlation Coefficient

Citizens Bancorp  Oak Ridge

Poor diversification

The 3 months correlation between Citizens and Oak is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancorp Investment and Oak Ridge Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Financial and Citizens Bancorp 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 Citizens Bancorp Investment are associated (or correlated) with Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Financial has no effect on the direction of Citizens Bancorp i.e., Citizens Bancorp and Oak Ridge go up and down completely randomly.

Pair Corralation between Citizens Bancorp and Oak Ridge

Given the investment horizon of 90 days Citizens Bancorp Investment is expected to generate 2.58 times more return on investment than Oak Ridge. However, Citizens Bancorp is 2.58 times more volatile than Oak Ridge Financial. It trades about 0.16 of its potential returns per unit of risk. Oak Ridge Financial is currently generating about 0.05 per unit of risk. If you would invest  2,484  in Citizens Bancorp Investment on December 2, 2024 and sell it today you would earn a total of  416.00  from holding Citizens Bancorp Investment or generate 16.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Citizens Bancorp Investment  vs.  Oak Ridge Financial

Citizens Bancorp Inv

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Citizens Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Oak Ridge Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Oak Ridge is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citizens Bancorp and Oak Ridge

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

The idea behind Citizens Bancorp Investment and Oak Ridge Financial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.