Correlation Between Citizens Bancorp and Heartland Banccorp

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

Diversification Opportunities for Citizens Bancorp and Heartland Banccorp

0.6

Correlation Coefficient

Citizens Bancorp  Heartland Banccorp

Poor diversification

The 3 months correlation between Citizens and Heartland is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancorp of and Heartland Banccorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Banccorp 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 Heartland Banccorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Banccorp has no effect on the direction of Citizens Bancorp i.e., Citizens Bancorp and Heartland Banccorp go up and down completely randomly.

Pair Corralation between Citizens Bancorp and Heartland Banccorp

Given the investment horizon of 90 days Citizens Bancorp is expected to generate 3.02 times less return on investment than Heartland Banccorp. But when comparing it to its historical volatility, Citizens Bancorp of is 1.86 times less risky than Heartland Banccorp. It trades about 0.1 of its potential returns per unit of risk. Heartland Banccorp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  14,180  in Heartland Banccorp on September 4, 2024 and sell it today you would earn a total of  2,270  from holding Heartland Banccorp or generate 16.01% return on investment over 90 days.

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

Citizens Bancorp of  vs.  Heartland Banccorp

Citizens Bancorp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp of are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental drivers, Citizens Bancorp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Heartland Banccorp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Banccorp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Heartland Banccorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Bancorp and Heartland Banccorp

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

The idea behind Citizens Bancorp of and Heartland Banccorp 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.