Correlation Between Citizens Financial and FNCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and FNCB 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 Citizens Financial and FNCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and FNCB Bancorp, you can compare the effects of market volatilities on Citizens Financial and FNCB 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 Citizens Financial with a short position of FNCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and FNCB Bancorp.
Diversification Opportunities for Citizens Financial and FNCB Bancorp
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citizens and FNCB is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and FNCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNCB Bancorp and Citizens 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 Citizens Financial Group are associated (or correlated) with FNCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNCB Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and FNCB Bancorp go up and down completely randomly.
Pair Corralation between Citizens Financial and FNCB Bancorp
Assuming the 90 days trading horizon Citizens Financial Group is expected to generate 0.15 times more return on investment than FNCB Bancorp. However, Citizens Financial Group is 6.84 times less risky than FNCB Bancorp. It trades about 0.12 of its potential returns per unit of risk. FNCB Bancorp is currently generating about -0.01 per unit of risk. If you would invest 2,492 in Citizens Financial Group on March 13, 2024 and sell it today you would earn a total of 56.00 from holding Citizens Financial Group or generate 2.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Citizens Financial Group vs. FNCB Bancorp
Performance |
Timeline |
Citizens Financial |
FNCB Bancorp |
Citizens Financial and FNCB Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citizens Financial and FNCB Bancorp
The main advantage of trading using opposite Citizens Financial and FNCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, FNCB 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 FNCB Bancorp will offset losses from the drop in FNCB Bancorp's long position.Citizens Financial vs. KeyCorp | Citizens Financial vs. Regions Financial | Citizens Financial vs. US Bancorp | Citizens Financial vs. KeyCorp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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