Correlation Between DCB Bank and Citizens Financial

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Can any of the company-specific risk be diversified away by investing in both DCB Bank 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 DCB Bank and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DCB Bank Limited and Citizens Financial Services, you can compare the effects of market volatilities on DCB Bank 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 DCB Bank with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DCB Bank and Citizens Financial.

Diversification Opportunities for DCB Bank and Citizens Financial

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between DCB and Citizens is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding DCB Bank Limited and Citizens Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial and DCB Bank 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 DCB Bank Limited 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 DCB Bank i.e., DCB Bank and Citizens Financial go up and down completely randomly.

Pair Corralation between DCB Bank and Citizens Financial

Assuming the 90 days trading horizon DCB Bank Limited is expected to generate 1.12 times more return on investment than Citizens Financial. However, DCB Bank is 1.12 times more volatile than Citizens Financial Services. It trades about 0.27 of its potential returns per unit of risk. Citizens Financial Services is currently generating about -0.02 per unit of risk. If you would invest  12,021  in DCB Bank Limited on August 28, 2025 and sell it today you would earn a total of  6,126  from holding DCB Bank Limited or generate 50.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DCB Bank Limited  vs.  Citizens Financial Services

 Performance 
       Timeline  
DCB Bank Limited 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in DCB Bank Limited are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, DCB Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.
Citizens Financial 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Citizens Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Citizens Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

DCB Bank and Citizens Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DCB Bank and Citizens Financial

The main advantage of trading using opposite DCB Bank and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DCB Bank 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 DCB Bank Limited and Citizens Financial Services 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.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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