Correlation Between Citizens Holding and First Capital

Can any of the company-specific risk be diversified away by investing in both Citizens Holding and First Capital 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 Holding and First Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citizens Holding and First Capital, you can compare the effects of market volatilities on Citizens Holding and First Capital 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 Holding with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Holding and First Capital.

Diversification Opportunities for Citizens Holding and First Capital

0.0

Correlation Coefficient

Citizens Holding  First Capital

Pay attention - limited upside

The 3 months correlation between Citizens and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Holding and First Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital and Citizens Holding 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 Holding are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital has no effect on the direction of Citizens Holding i.e., Citizens Holding and First Capital go up and down completely randomly.

Pair Corralation between Citizens Holding and First Capital

If you would invest  3,281  in First Capital on November 29, 2024 and sell it today you would earn a total of  395.00  from holding First Capital or generate 12.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citizens Holding  vs.  First Capital

Citizens Holding

Risk-Adjusted Performance

Very Weak

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

First Capital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, First Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Holding and First Capital

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

The idea behind Citizens Holding and First Capital 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.