Correlation Between Citizens Financial and Investar Holding

Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Investar Holding 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 Investar Holding 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 Investar Holding Corp, you can compare the effects of market volatilities on Citizens Financial and Investar Holding 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 Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Investar Holding.

Diversification Opportunities for Citizens Financial and Investar Holding

-0.64

Correlation Coefficient

Citizens Financial  Investar Holding

Excellent diversification

The 3 months correlation between Citizens and Investar is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Investar Holding go up and down completely randomly.

Pair Corralation between Citizens Financial and Investar Holding

Assuming the 90 days trading horizon Citizens Financial is expected to generate 27.97 times less return on investment than Investar Holding. But when comparing it to its historical volatility, Citizens Financial Group is 2.24 times less risky than Investar Holding. It trades about 0.01 of its potential returns per unit of risk. Investar Holding Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,859  in Investar Holding Corp on September 2, 2024 and sell it today you would earn a total of  523.00  from holding Investar Holding Corp or generate 28.13% return on investment over 90 days.

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

Citizens Financial Group  vs.  Investar Holding Corp

Citizens Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Investar Holding Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investar Holding Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Investar Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and Investar Holding

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

The idea behind Citizens Financial Group and Investar Holding Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.