Correlation Between Citizens Bancorp and Community Heritage

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

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

Diversification Opportunities for Citizens Bancorp and Community Heritage

-0.72

Correlation Coefficient

Citizens Bancorp  Community Heritage

Pay attention - limited upside

The 3 months correlation between Citizens and Community is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancorp of and Community Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Heritage and Citizens Bancorp 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 Bancorp of are associated (or correlated) with Community Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Heritage has no effect on the direction of Citizens Bancorp i.e., Citizens Bancorp and Community Heritage go up and down completely randomly.

Pair Corralation between Citizens Bancorp and Community Heritage

Given the investment horizon of 90 days Citizens Bancorp of is expected to under-perform the Community Heritage. But the pink sheet apears to be less risky and, when comparing its historical volatility, Citizens Bancorp of is 1.16 times less risky than Community Heritage. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Community Heritage Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,392  in Community Heritage Financial on December 30, 2024 and sell it today you would earn a total of  63.00  from holding Community Heritage Financial or generate 2.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	77.05%
Values	Daily Returns

Citizens Bancorp of  vs.  Community Heritage Financial

Citizens Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Bancorp of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Citizens Bancorp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Community Heritage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community Heritage Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Community Heritage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citizens Bancorp and Community Heritage

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

The idea behind Citizens Bancorp of and Community Heritage Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.