Correlation Between Fentura Financial and Citizens Financial

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

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

Diversification Opportunities for Fentura Financial and Citizens Financial

0.84

Correlation Coefficient

Fentura Financial  Citizens Financial

Very poor diversification

The 3 months correlation between Fentura and Citizens is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fentura Financial 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 Fentura 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 Fentura Financial 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 Fentura Financial i.e., Fentura Financial and Citizens Financial go up and down completely randomly.

Pair Corralation between Fentura Financial and Citizens Financial

Given the investment horizon of 90 days Fentura Financial is expected to generate 0.94 times more return on investment than Citizens Financial. However, Fentura Financial is 1.06 times less risky than Citizens Financial. It trades about 0.26 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.1 per unit of risk. If you would invest  2,237  in Fentura Financial on September 25, 2024 and sell it today you would earn a total of  2,215  from holding Fentura Financial or generate 99.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.2%
Values	Daily Returns

Fentura Financial  vs.  Citizens Financial Corp

Fentura Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fentura Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Fentura Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Citizens Financial Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Citizens Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fentura Financial and Citizens Financial

The main advantage of trading using opposite Fentura Financial and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fentura Financial 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 Fentura Financial 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.