Correlation Between Security Federal and Citizens Bancshares

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

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

Diversification Opportunities for Security Federal and Citizens Bancshares

0.16

Correlation Coefficient

Security Federal  Citizens Bancshares

Average diversification

The 3 months correlation between Security and Citizens is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Security Federal and Citizens Bancshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancshares Corp and Security Federal 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 Security Federal are associated (or correlated) with Citizens Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancshares Corp has no effect on the direction of Security Federal i.e., Security Federal and Citizens Bancshares go up and down completely randomly.

Pair Corralation between Security Federal and Citizens Bancshares

Given the investment horizon of 90 days Security Federal is expected to generate 1.05 times more return on investment than Citizens Bancshares. However, Security Federal is 1.05 times more volatile than Citizens Bancshares Corp. It trades about 0.12 of its potential returns per unit of risk. Citizens Bancshares Corp is currently generating about 0.07 per unit of risk. If you would invest  2,701  in Security Federal on December 22, 2024 and sell it today you would earn a total of  274.00  from holding Security Federal or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

Security Federal  vs.  Citizens Bancshares Corp

Security Federal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Security Federal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Security Federal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Citizens Bancshares Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancshares Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Citizens Bancshares may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Security Federal and Citizens Bancshares

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

The idea behind Security Federal and Citizens Bancshares 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.