Correlation Between Citizens Financial and AmeriServ Financial

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

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

Diversification Opportunities for Citizens Financial and AmeriServ Financial

0.41

Correlation Coefficient

Citizens Financial  AmeriServ Financial

Very weak diversification

The 3 months correlation between Citizens and AmeriServ is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and AmeriServ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeriServ Financial and Citizens Financial 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 Financial Group are associated (or correlated) with AmeriServ Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeriServ Financial has no effect on the direction of Citizens Financial i.e., Citizens Financial and AmeriServ Financial go up and down completely randomly.

Pair Corralation between Citizens Financial and AmeriServ Financial

Assuming the 90 days trading horizon Citizens Financial Group is expected to generate 0.68 times more return on investment than AmeriServ Financial. However, Citizens Financial Group is 1.46 times less risky than AmeriServ Financial. It trades about -0.02 of its potential returns per unit of risk. AmeriServ Financial is currently generating about -0.05 per unit of risk. If you would invest  2,067  in Citizens Financial Group on December 2, 2024 and sell it today you would lose (46.00) from holding Citizens Financial Group or give up 2.23% of portfolio value over 90 days.

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

Citizens Financial Group  vs.  AmeriServ Financial

Citizens Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

AmeriServ Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days AmeriServ Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, AmeriServ Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citizens Financial and AmeriServ Financial

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

The idea behind Citizens Financial Group and AmeriServ 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.