Correlation Between Penns Woods and Citizens Northern
Can any of the company-specific risk be diversified away by investing in both Penns Woods and Citizens Northern 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 Penns Woods and Citizens Northern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penns Woods Bancorp and Citizens Northern Corp, you can compare the effects of market volatilities on Penns Woods and Citizens Northern 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 Penns Woods with a short position of Citizens Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penns Woods and Citizens Northern.
Diversification Opportunities for Penns Woods and Citizens Northern
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Penns and Citizens is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Penns Woods Bancorp and Citizens Northern Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Northern Corp and Penns Woods 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 Penns Woods Bancorp are associated (or correlated) with Citizens Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Northern Corp has no effect on the direction of Penns Woods i.e., Penns Woods and Citizens Northern go up and down completely randomly.
Pair Corralation between Penns Woods and Citizens Northern
Given the investment horizon of 90 days Penns Woods Bancorp is expected to under-perform the Citizens Northern. But the stock apears to be less risky and, when comparing its historical volatility, Penns Woods Bancorp is 1.29 times less risky than Citizens Northern. The stock trades about -0.01 of its potential returns per unit of risk. The Citizens Northern Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,007 in Citizens Northern Corp on March 8, 2024 and sell it today you would lose (288.00) from holding Citizens Northern Corp or give up 14.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Penns Woods Bancorp vs. Citizens Northern Corp
Performance |
Timeline |
Penns Woods Bancorp |
Citizens Northern Corp |
Penns Woods and Citizens Northern Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penns Woods and Citizens Northern
The main advantage of trading using opposite Penns Woods and Citizens Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penns Woods position performs unexpectedly, Citizens Northern 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 Northern will offset losses from the drop in Citizens Northern's long position.Penns Woods vs. JPMorgan Chase Co | Penns Woods vs. Citigroup | Penns Woods vs. Wells Fargo | Penns Woods vs. Toronto Dominion Bank |
Citizens Northern vs. JPMorgan Chase Co | Citizens Northern vs. Citigroup | Citizens Northern vs. Wells Fargo | Citizens Northern vs. Toronto Dominion Bank |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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