Correlation Between Chesapeake Finl and Citizens Financial

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

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

Diversification Opportunities for Chesapeake Finl and Citizens Financial

0.74

Correlation Coefficient

Chesapeake Finl  Citizens Financial

Poor diversification

The 3 months correlation between Chesapeake and Citizens is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Finl Shs and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp and Chesapeake Finl 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 Chesapeake Finl Shs 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 Corp has no effect on the direction of Chesapeake Finl i.e., Chesapeake Finl and Citizens Financial go up and down completely randomly.

Pair Corralation between Chesapeake Finl and Citizens Financial

Given the investment horizon of 90 days Chesapeake Finl Shs is expected to generate 0.98 times more return on investment than Citizens Financial. However, Chesapeake Finl Shs is 1.02 times less risky than Citizens Financial. It trades about 0.17 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.13 per unit of risk. If you would invest  1,934  in Chesapeake Finl Shs on May 5, 2025 and sell it today you would earn a total of  266.00  from holding Chesapeake Finl Shs or generate 13.75% return on investment over 90 days.

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

Chesapeake Finl Shs  vs.  Citizens Financial Corp

Chesapeake Finl Shs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Finl Shs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Chesapeake Finl reported solid returns over the last few months and may actually be approaching a breakup point.

Citizens Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Citizens Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Chesapeake Finl and Citizens Financial

The main advantage of trading using opposite Chesapeake Finl and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Finl 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 Chesapeake Finl Shs and Citizens Financial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..