Correlation Between Potomac Bancshares and Citizens Bancorp
Can any of the company-specific risk be diversified away by investing in both Potomac Bancshares 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 Potomac Bancshares and Citizens Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potomac Bancshares and Citizens Bancorp Investment, you can compare the effects of market volatilities on Potomac Bancshares 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 Potomac Bancshares with a short position of Citizens Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potomac Bancshares and Citizens Bancorp.
Diversification Opportunities for Potomac Bancshares and Citizens Bancorp
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Potomac and Citizens is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Potomac Bancshares 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 Potomac Bancshares 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 Potomac Bancshares 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 Potomac Bancshares i.e., Potomac Bancshares and Citizens Bancorp go up and down completely randomly.
Pair Corralation between Potomac Bancshares and Citizens Bancorp
Given the investment horizon of 90 days Potomac Bancshares is expected to under-perform the Citizens Bancorp. In addition to that, Potomac Bancshares is 1.53 times more volatile than Citizens Bancorp Investment. It trades about -0.01 of its total potential returns per unit of risk. Citizens Bancorp Investment is currently generating about 0.16 per unit of volatility. If you would invest 2,484 in Citizens Bancorp Investment on December 1, 2024 and sell it today you would earn a total of 416.00 from holding Citizens Bancorp Investment or generate 16.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.77% |
Values | Daily Returns |
Potomac Bancshares vs. Citizens Bancorp Investment
Performance |
Timeline |
Potomac Bancshares |
Citizens Bancorp Inv |
Potomac Bancshares and Citizens Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Potomac Bancshares and Citizens Bancorp
The main advantage of trading using opposite Potomac Bancshares and Citizens Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potomac Bancshares 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.Potomac Bancshares vs. Apollo Bancorp | Potomac Bancshares vs. The Farmers Bank | Potomac Bancshares vs. Community Bankers | Potomac Bancshares vs. CCSB Financial Corp |
Citizens Bancorp vs. Greenville Federal Financial | Citizens Bancorp vs. First Ottawa Bancshares | Citizens Bancorp vs. Coastal Carolina Bancshares | Citizens Bancorp vs. First Bankers Trustshares |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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