Correlation Between Citizens Financial and MBT Bancshares

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

Diversification Opportunities for Citizens Financial and MBT Bancshares

-0.09

Correlation Coefficient

Citizens Financial  MBT Bancshares

Good diversification

The 3 months correlation between Citizens and MBT is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and MBT Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBT Bancshares 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 MBT Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBT Bancshares has no effect on the direction of Citizens Financial i.e., Citizens Financial and MBT Bancshares go up and down completely randomly.

Pair Corralation between Citizens Financial and MBT Bancshares

Given the investment horizon of 90 days Citizens Financial Corp is expected to generate 2.2 times more return on investment than MBT Bancshares. However, Citizens Financial is 2.2 times more volatile than MBT Bancshares. It trades about 0.19 of its potential returns per unit of risk. MBT Bancshares is currently generating about 0.1 per unit of risk. If you would invest  2,474  in Citizens Financial Corp on December 1, 2024 and sell it today you would earn a total of  426.00  from holding Citizens Financial Corp or generate 17.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.16%
Values	Daily Returns

Citizens Financial Corp  vs.  MBT Bancshares

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.

MBT Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MBT Bancshares are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward-looking signals, MBT Bancshares may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citizens Financial and MBT Bancshares

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

The idea behind Citizens Financial Corp and MBT Bancshares 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.