Correlation Between Citizens Financial and FFW

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

Diversification Opportunities for Citizens Financial and FFW

-0.27

Correlation Coefficient

Citizens Financial  FFW

Very good diversification

The 3 months correlation between Citizens and FFW is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and FFW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFW Corporation 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 FFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFW Corporation has no effect on the direction of Citizens Financial i.e., Citizens Financial and FFW go up and down completely randomly.

Pair Corralation between Citizens Financial and FFW

Given the investment horizon of 90 days Citizens Financial Corp is expected to generate 1.2 times more return on investment than FFW. However, Citizens Financial is 1.2 times more volatile than FFW Corporation. It trades about 0.14 of its potential returns per unit of risk. FFW Corporation is currently generating about 0.15 per unit of risk. If you would invest  2,800  in Citizens Financial Corp on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Citizens Financial Corp or generate 3.57% return on investment over 90 days.

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

Citizens Financial Corp  vs.  FFW Corp.

Citizens Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Citizens Financial showed solid returns over the last few months and may actually be approaching a breakup point.

FFW Corporation

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FFW Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, FFW is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citizens Financial and FFW

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

The idea behind Citizens Financial Corp and FFW Corporation 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.