Correlation Between Citizens Financial and ENB Financial

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

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

Diversification Opportunities for Citizens Financial and ENB Financial

0.62

Correlation Coefficient

Citizens Financial  ENB Financial

Poor diversification

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

Pair Corralation between Citizens Financial and ENB Financial

Given the investment horizon of 90 days Citizens Financial is expected to generate 1.23 times less return on investment than ENB Financial. In addition to that, Citizens Financial is 1.04 times more volatile than ENB Financial Corp. It trades about 0.04 of its total potential returns per unit of risk. ENB Financial Corp is currently generating about 0.05 per unit of volatility. If you would invest  1,332  in ENB Financial Corp on October 3, 2024 and sell it today you would earn a total of  388.00  from holding ENB Financial Corp or generate 29.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.52%
Values	Daily Returns

Citizens Financial Corp  vs.  ENB Financial Corp

Citizens Financial Corp

Risk-Adjusted Performance

12 of 100

Good

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

ENB Financial Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ENB Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, ENB Financial is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citizens Financial and ENB Financial

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

The idea behind Citizens Financial Corp and ENB Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.