Correlation Between Kentucky First and Citizens Financial

Can any of the company-specific risk be diversified away by investing in both Kentucky First 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 Kentucky First and Citizens Financial 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 Financial Services, you can compare the effects of market volatilities on Kentucky First 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 Kentucky First with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky First and Citizens Financial.

Diversification Opportunities for Kentucky First and Citizens Financial

0.5

Correlation Coefficient

Kentucky First  Citizens Financial

Very weak diversification

The 3 months correlation between Kentucky and Citizens is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky First Federal and Citizens Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial 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 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 has no effect on the direction of Kentucky First i.e., Kentucky First and Citizens Financial go up and down completely randomly.

Pair Corralation between Kentucky First and Citizens Financial

Given the investment horizon of 90 days Kentucky First Federal is expected to generate 1.09 times more return on investment than Citizens Financial. However, Kentucky First is 1.09 times more volatile than Citizens Financial Services. It trades about 0.0 of its potential returns per unit of risk. Citizens Financial Services is currently generating about -0.04 per unit of risk. If you would invest  301.00  in Kentucky First Federal on December 30, 2024 and sell it today you would lose (11.00) from holding Kentucky First Federal or give up 3.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Kentucky First Federal  vs.  Citizens Financial Services

Kentucky First Federal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kentucky First Federal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Kentucky First is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Citizens Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citizens Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Kentucky First and Citizens Financial

The main advantage of trading using opposite Kentucky First and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentucky First 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 Kentucky First Federal and Citizens Financial Services 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.