Correlation Between Citizens Bancorp and Magyar Bancorp

Can any of the company-specific risk be diversified away by investing in both Citizens Bancorp and Magyar 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 Citizens Bancorp and Magyar Bancorp 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 Magyar Bancorp, you can compare the effects of market volatilities on Citizens Bancorp and Magyar 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 Citizens Bancorp with a short position of Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Bancorp and Magyar Bancorp.

Diversification Opportunities for Citizens Bancorp and Magyar Bancorp

0.62

Correlation Coefficient

Citizens Bancorp  Magyar Bancorp

Poor diversification

The 3 months correlation between Citizens and Magyar is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancorp Investment and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp 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 Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of Citizens Bancorp i.e., Citizens Bancorp and Magyar Bancorp go up and down completely randomly.

Pair Corralation between Citizens Bancorp and Magyar Bancorp

Given the investment horizon of 90 days Citizens Bancorp is expected to generate 2.56 times less return on investment than Magyar Bancorp. But when comparing it to its historical volatility, Citizens Bancorp Investment is 2.73 times less risky than Magyar Bancorp. It trades about 0.23 of its potential returns per unit of risk. Magyar Bancorp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,321  in Magyar Bancorp on September 22, 2024 and sell it today you would earn a total of  144.00  from holding Magyar Bancorp or generate 10.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citizens Bancorp Investment  vs.  Magyar Bancorp

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.

Magyar Bancorp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Magyar Bancorp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Magyar Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Bancorp and Magyar Bancorp

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

The idea behind Citizens Bancorp Investment and Magyar Bancorp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.