Correlation Between Citizens Financial and United Bancorporation

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

Diversification Opportunities for Citizens Financial and United Bancorporation

0.87

Correlation Coefficient

Citizens Financial  United Bancorporation

Very poor diversification

The 3 months correlation between Citizens and United is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and United Bancorp. of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorporation 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 United Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorporation has no effect on the direction of Citizens Financial i.e., Citizens Financial and United Bancorporation go up and down completely randomly.

Pair Corralation between Citizens Financial and United Bancorporation

Given the investment horizon of 90 days Citizens Financial Corp is expected to under-perform the United Bancorporation. In addition to that, Citizens Financial is 1.69 times more volatile than United Bancorporation of. It trades about -0.26 of its total potential returns per unit of risk. United Bancorporation of is currently generating about -0.12 per unit of volatility. If you would invest  5,840  in United Bancorporation of on September 27, 2024 and sell it today you would lose (113.00) from holding United Bancorporation of or give up 1.93% of portfolio value over 90 days.

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

Citizens Financial Corp  vs.  United Bancorp. of

Citizens Financial Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Citizens Financial showed solid returns over the last few months and may actually be approaching a breakup point.

United Bancorporation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Bancorporation of are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, United Bancorporation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Financial and United Bancorporation

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

The idea behind Citizens Financial Corp and United Bancorporation 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.