Correlation Between Citizens Bancshares and Summit Bancshares

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Can any of the company-specific risk be diversified away by investing in both Citizens Bancshares and Summit 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 Bancshares and Summit Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Bancshares Corp and Summit Bancshares, you can compare the effects of market volatilities on Citizens Bancshares and Summit 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 Bancshares with a short position of Summit Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Bancshares and Summit Bancshares.

Diversification Opportunities for Citizens Bancshares and Summit Bancshares

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Citizens and Summit is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancshares Corp and Summit Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bancshares and Citizens Bancshares 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 Bancshares Corp are associated (or correlated) with Summit Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bancshares has no effect on the direction of Citizens Bancshares i.e., Citizens Bancshares and Summit Bancshares go up and down completely randomly.

Pair Corralation between Citizens Bancshares and Summit Bancshares

Given the investment horizon of 90 days Citizens Bancshares Corp is expected to under-perform the Summit Bancshares. In addition to that, Citizens Bancshares is 1.9 times more volatile than Summit Bancshares. It trades about -0.08 of its total potential returns per unit of risk. Summit Bancshares is currently generating about 0.16 per unit of volatility. If you would invest  4,381  in Summit Bancshares on October 8, 2024 and sell it today you would earn a total of  110.00  from holding Summit Bancshares or generate 2.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Citizens Bancshares Corp  vs.  Summit Bancshares

 Performance 
       Timeline  
Citizens Bancshares Corp 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancshares Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Citizens Bancshares is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Summit Bancshares 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Bancshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Summit Bancshares is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Citizens Bancshares and Summit Bancshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citizens Bancshares and Summit Bancshares

The main advantage of trading using opposite Citizens Bancshares and Summit Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Bancshares position performs unexpectedly, Summit 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 Summit Bancshares will offset losses from the drop in Summit Bancshares' long position.
The idea behind Citizens Bancshares Corp and Summit 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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