Correlation Between Citizens Financial and First National

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

Diversification Opportunities for Citizens Financial and First National

-0.5

Correlation Coefficient

Citizens Financial  First National

Very good diversification

The 3 months correlation between Citizens and First is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and First National of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National has no effect on the direction of Citizens Financial i.e., Citizens Financial and First National go up and down completely randomly.

Pair Corralation between Citizens Financial and First National

Given the investment horizon of 90 days Citizens Financial Corp is expected to generate 2.14 times more return on investment than First National. However, Citizens Financial is 2.14 times more volatile than First National of. It trades about 0.23 of its potential returns per unit of risk. First National of is currently generating about -0.07 per unit of risk. If you would invest  2,425  in Citizens Financial Corp on October 22, 2024 and sell it today you would earn a total of  275.00  from holding Citizens Financial Corp or generate 11.34% return on investment over 90 days.

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

Citizens Financial Corp  vs.  First National of

Citizens Financial Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Citizens Financial showed solid returns over the last few months and may actually be approaching a breakup point.

First National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First National of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First National is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citizens Financial and First National

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

The idea behind Citizens Financial Corp and First National of 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..