Correlation Between Delhi Bank and Citizens Financial

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

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

Diversification Opportunities for Delhi Bank and Citizens Financial

0.23

Correlation Coefficient

Delhi Bank  Citizens Financial

Modest diversification

The 3 months correlation between Delhi and Citizens is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Delhi Bank Corp and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp and Delhi Bank 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 Delhi Bank Corp are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Corp has no effect on the direction of Delhi Bank i.e., Delhi Bank and Citizens Financial go up and down completely randomly.

Pair Corralation between Delhi Bank and Citizens Financial

Given the investment horizon of 90 days Delhi Bank is expected to generate 11.84 times less return on investment than Citizens Financial. But when comparing it to its historical volatility, Delhi Bank Corp is 2.55 times less risky than Citizens Financial. It trades about 0.01 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,626  in Citizens Financial Corp on September 19, 2024 and sell it today you would earn a total of  799.00  from holding Citizens Financial Corp or generate 49.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.42%
Values	Daily Returns

Delhi Bank Corp  vs.  Citizens Financial Corp

Delhi Bank Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Delhi Bank Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Citizens Financial Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Citizens Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delhi Bank and Citizens Financial

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

The idea behind Delhi Bank Corp and Citizens Financial Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.