Correlation Between Citizens Community and Perma Pipe

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

Diversification Opportunities for Citizens Community and Perma Pipe

0.82

Correlation Coefficient

Citizens Community  Perma Pipe

Very poor diversification

The 3 months correlation between Citizens and Perma is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Community Bancorp and Perma Pipe International Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Pipe Internati 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 Perma Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Pipe Internati has no effect on the direction of Citizens Community i.e., Citizens Community and Perma Pipe go up and down completely randomly.

Pair Corralation between Citizens Community and Perma Pipe

Given the investment horizon of 90 days Citizens Community is expected to generate 2.23 times less return on investment than Perma Pipe. But when comparing it to its historical volatility, Citizens Community Bancorp is 3.23 times less risky than Perma Pipe. It trades about 0.29 of its potential returns per unit of risk. Perma Pipe International Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,015  in Perma Pipe International Holdings on September 4, 2024 and sell it today you would earn a total of  564.00  from holding Perma Pipe International Holdings or generate 55.57% return on investment over 90 days.

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

Citizens Community Bancorp  vs.  Perma Pipe International Holdi

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.

Perma Pipe Internati

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Pipe International Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, Perma Pipe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citizens Community and Perma Pipe

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

The idea behind Citizens Community Bancorp and Perma Pipe International Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.