Correlation Between Citizens Community and Canterbury Park

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

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

Diversification Opportunities for Citizens Community and Canterbury Park

0.3

Correlation Coefficient

Citizens Community  Canterbury Park

Weak diversification

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

Pair Corralation between Citizens Community and Canterbury Park

Given the investment horizon of 90 days Citizens Community Bancorp is expected to under-perform the Canterbury Park. But the stock apears to be less risky and, when comparing its historical volatility, Citizens Community Bancorp is 2.57 times less risky than Canterbury Park. The stock trades about -0.07 of its potential returns per unit of risk. The Canterbury Park Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,088  in Canterbury Park Holding on November 28, 2024 and sell it today you would earn a total of  37.00  from holding Canterbury Park Holding or generate 1.77% return on investment over 90 days.

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

Citizens Community Bancorp  vs.  Canterbury Park Holding

Citizens Community

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Community Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Citizens Community is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Canterbury Park Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canterbury Park Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Canterbury Park is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citizens Community and Canterbury Park

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

The idea behind Citizens Community Bancorp and Canterbury Park Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.