Correlation Between Citizens Community and Epsilon Energy

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

Diversification Opportunities for Citizens Community and Epsilon Energy

0.49

Correlation Coefficient

Citizens Community  Epsilon Energy

Very weak diversification

The 3 months correlation between Citizens and Epsilon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Community Bancorp and Epsilon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epsilon Energy 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 Epsilon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epsilon Energy has no effect on the direction of Citizens Community i.e., Citizens Community and Epsilon Energy go up and down completely randomly.

Pair Corralation between Citizens Community and Epsilon Energy

Given the investment horizon of 90 days Citizens Community Bancorp is expected to generate 0.48 times more return on investment than Epsilon Energy. However, Citizens Community Bancorp is 2.07 times less risky than Epsilon Energy. It trades about 0.29 of its potential returns per unit of risk. Epsilon Energy is currently generating about 0.07 per unit of risk. If you would invest  1,341  in Citizens Community Bancorp on September 4, 2024 and sell it today you would earn a total of  321.00  from holding Citizens Community Bancorp or generate 23.94% return on investment over 90 days.

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

Citizens Community Bancorp  vs.  Epsilon Energy

Citizens Community

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Community Bancorp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Citizens Community demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Epsilon Energy

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Epsilon Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Epsilon Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citizens Community and Epsilon Energy

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

The idea behind Citizens Community Bancorp and Epsilon Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.