Correlation Between Citizens Financial and Farmers

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

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

Diversification Opportunities for Citizens Financial and Farmers

-0.34

Correlation Coefficient

Citizens Financial  Farmers

Very good diversification

The 3 months correlation between Citizens and Farmers is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Services and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants and Citizens Financial 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 Financial Services are associated (or correlated) with Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Citizens Financial i.e., Citizens Financial and Farmers go up and down completely randomly.

Pair Corralation between Citizens Financial and Farmers

Given the investment horizon of 90 days Citizens Financial Services is expected to under-perform the Farmers. In addition to that, Citizens Financial is 6.28 times more volatile than Farmers And Merchants. It trades about -0.04 of its total potential returns per unit of risk. Farmers And Merchants is currently generating about 0.03 per unit of volatility. If you would invest  567,245  in Farmers And Merchants on December 29, 2024 and sell it today you would earn a total of  4,755  from holding Farmers And Merchants or generate 0.84% return on investment over 90 days.

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

Citizens Financial Services  vs.  Farmers And Merchants

Citizens Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Farmers And Merchants

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Farmers And Merchants are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Farmers is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citizens Financial and Farmers

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

The idea behind Citizens Financial Services and Farmers And Merchants 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.