Correlation Between Kentucky First and Citizens Bancorp

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

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

Diversification Opportunities for Kentucky First and Citizens Bancorp

0.08

Correlation Coefficient

Kentucky First  Citizens Bancorp

Significant diversification

The 3 months correlation between Kentucky and Citizens is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky First Federal and Citizens Bancorp Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp Inv and Kentucky First 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 Kentucky First Federal are associated (or correlated) with Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp Inv has no effect on the direction of Kentucky First i.e., Kentucky First and Citizens Bancorp go up and down completely randomly.

Pair Corralation between Kentucky First and Citizens Bancorp

Given the investment horizon of 90 days Kentucky First Federal is expected to generate 4.33 times more return on investment than Citizens Bancorp. However, Kentucky First is 4.33 times more volatile than Citizens Bancorp Investment. It trades about 0.15 of its potential returns per unit of risk. Citizens Bancorp Investment is currently generating about 0.23 per unit of risk. If you would invest  258.00  in Kentucky First Federal on September 22, 2024 and sell it today you would earn a total of  28.00  from holding Kentucky First Federal or generate 10.85% return on investment over 90 days.

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

Kentucky First Federal  vs.  Citizens Bancorp Investment

Kentucky First Federal

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kentucky First Federal are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical and fundamental indicators, Kentucky First sustained solid returns over the last few months and may actually be approaching a breakup point.

Citizens Bancorp Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citizens Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kentucky First and Citizens Bancorp

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

The idea behind Kentucky First Federal and Citizens Bancorp Investment 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.