Correlation Between Citizens Bancorp and Private Bancorp

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

Diversification Opportunities for Citizens Bancorp and Private Bancorp

0.3

Correlation Coefficient

Citizens Bancorp  Private Bancorp

Weak diversification

The 3 months correlation between Citizens and Private is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancorp of and Private Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Private Bancorp 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 Private Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Private Bancorp has no effect on the direction of Citizens Bancorp i.e., Citizens Bancorp and Private Bancorp go up and down completely randomly.

Pair Corralation between Citizens Bancorp and Private Bancorp

Given the investment horizon of 90 days Citizens Bancorp of is expected to under-perform the Private Bancorp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Citizens Bancorp of is 1.93 times less risky than Private Bancorp. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Private Bancorp of is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  5,700  in Private Bancorp of on December 29, 2024 and sell it today you would lose (200.00) from holding Private Bancorp of or give up 3.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Citizens Bancorp of  vs.  Private Bancorp of

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.

Private Bancorp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Citizens Bancorp and Private Bancorp

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

The idea behind Citizens Bancorp of and Private Bancorp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.