Correlation Between Alpine Banks and Citizens Bancshares

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

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

Diversification Opportunities for Alpine Banks and Citizens Bancshares

-0.02

Correlation Coefficient

Alpine Banks  Citizens Bancshares

Good diversification

The 3 months correlation between Alpine and Citizens is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Banks of 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 Alpine Banks 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 Alpine Banks of 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 Alpine Banks i.e., Alpine Banks and Citizens Bancshares go up and down completely randomly.

Pair Corralation between Alpine Banks and Citizens Bancshares

Assuming the 90 days horizon Alpine Banks of is expected to generate 0.45 times more return on investment than Citizens Bancshares. However, Alpine Banks of is 2.21 times less risky than Citizens Bancshares. It trades about 0.31 of its potential returns per unit of risk. Citizens Bancshares Corp is currently generating about 0.01 per unit of risk. If you would invest  2,920  in Alpine Banks of on September 28, 2024 and sell it today you would earn a total of  503.00  from holding Alpine Banks of or generate 17.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Alpine Banks of  vs.  Citizens Bancshares Corp

Alpine Banks

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Banks of are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, Alpine Banks sustained solid returns over the last few months and may actually be approaching a breakup point.

Citizens Bancshares Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citizens Bancshares Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Citizens Bancshares is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alpine Banks and Citizens Bancshares

The main advantage of trading using opposite Alpine Banks and Citizens Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpine Banks 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 Alpine Banks of 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.