Correlation Between Affinity Bancshares and Citizens Financial

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

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

Diversification Opportunities for Affinity Bancshares and Citizens Financial

-0.02

Correlation Coefficient

Affinity Bancshares  Citizens Financial

Good diversification

The 3 months correlation between Affinity and Citizens is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Citizens Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and Affinity 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 Affinity Bancshares 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 Affinity Bancshares i.e., Affinity Bancshares and Citizens Financial go up and down completely randomly.

Pair Corralation between Affinity Bancshares and Citizens Financial

Given the investment horizon of 90 days Affinity Bancshares is expected to generate 0.88 times more return on investment than Citizens Financial. However, Affinity Bancshares is 1.14 times less risky than Citizens Financial. It trades about 0.05 of its potential returns per unit of risk. Citizens Financial Group is currently generating about -0.01 per unit of risk. If you would invest  1,651  in Affinity Bancshares on January 25, 2024 and sell it today you would earn a total of  23.00  from holding Affinity Bancshares or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Affinity Bancshares  vs.  Citizens Financial Group

Affinity Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Affinity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, Affinity Bancshares is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Citizens Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Citizens Financial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Affinity Bancshares and Citizens Financial

The main advantage of trading using opposite Affinity Bancshares and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares 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 Affinity Bancshares and Citizens Financial Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.