Correlation Between Citizens Financial and PSB Holdings

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

Diversification Opportunities for Citizens Financial and PSB Holdings

-0.34

Correlation Coefficient

Citizens Financial  PSB Holdings

Very good diversification

The 3 months correlation between Citizens and PSB is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings 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 PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of Citizens Financial i.e., Citizens Financial and PSB Holdings go up and down completely randomly.

Pair Corralation between Citizens Financial and PSB Holdings

Given the investment horizon of 90 days Citizens Financial Corp is expected to generate 2.3 times more return on investment than PSB Holdings. However, Citizens Financial is 2.3 times more volatile than PSB Holdings. It trades about 0.04 of its potential returns per unit of risk. PSB Holdings is currently generating about 0.01 per unit of risk. If you would invest  2,675  in Citizens Financial Corp on December 21, 2024 and sell it today you would earn a total of  52.00  from holding Citizens Financial Corp or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.97%
Values	Daily Returns

Citizens Financial Corp  vs.  PSB Holdings

Citizens Financial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Citizens Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PSB Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PSB Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, PSB Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citizens Financial and PSB Holdings

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

The idea behind Citizens Financial Corp and PSB Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.