Correlation Between Citizens Financial and Evans Bancorp

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

Diversification Opportunities for Citizens Financial and Evans Bancorp

-0.08

Correlation Coefficient

Citizens Financial  Evans Bancorp

Good diversification

The 3 months correlation between Citizens and Evans is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Evans Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evans Bancorp 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 Evans Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evans Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Evans Bancorp go up and down completely randomly.

Pair Corralation between Citizens Financial and Evans Bancorp

Assuming the 90 days trading horizon Citizens Financial Group, is expected to generate 0.42 times more return on investment than Evans Bancorp. However, Citizens Financial Group, is 2.37 times less risky than Evans Bancorp. It trades about 0.04 of its potential returns per unit of risk. Evans Bancorp is currently generating about -0.09 per unit of risk. If you would invest  2,581  in Citizens Financial Group, on December 30, 2024 and sell it today you would earn a total of  37.00  from holding Citizens Financial Group, or generate 1.43% return on investment over 90 days.

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

Citizens Financial Group,  vs.  Evans Bancorp

Citizens Financial Group,

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Evans Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evans Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Citizens Financial and Evans Bancorp

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

The idea behind Citizens Financial Group, and Evans 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.