Correlation Between Citizens Financial and Harford Bank
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Harford Bank 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 Harford Bank 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 Harford Bank, you can compare the effects of market volatilities on Citizens Financial and Harford Bank 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 Harford Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Harford Bank.
Diversification Opportunities for Citizens Financial and Harford Bank
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citizens and Harford is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and Harford Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harford Bank 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 Harford Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harford Bank has no effect on the direction of Citizens Financial i.e., Citizens Financial and Harford Bank go up and down completely randomly.
Pair Corralation between Citizens Financial and Harford Bank
Given the investment horizon of 90 days Citizens Financial Corp is expected to under-perform the Harford Bank. In addition to that, Citizens Financial is 1.69 times more volatile than Harford Bank. It trades about -0.27 of its total potential returns per unit of risk. Harford Bank is currently generating about 0.04 per unit of volatility. If you would invest 3,451 in Harford Bank on September 25, 2024 and sell it today you would earn a total of 19.00 from holding Harford Bank or generate 0.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Citizens Financial Corp vs. Harford Bank
Performance |
Timeline |
Citizens Financial Corp |
Harford Bank |
Citizens Financial and Harford Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citizens Financial and Harford Bank
The main advantage of trading using opposite Citizens Financial and Harford Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Harford Bank 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 Harford Bank will offset losses from the drop in Harford Bank's long position.Citizens Financial vs. Banco Bradesco SA | Citizens Financial vs. Itau Unibanco Banco | Citizens Financial vs. Lloyds Banking Group | Citizens Financial vs. Deutsche Bank AG |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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