Correlation Between Citizens Financial and Cars
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Cars 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 Citizens Financial and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Group and Cars Inc, you can compare the effects of market volatilities on Citizens Financial and Cars 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 Citizens Financial with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Cars.
Diversification Opportunities for Citizens Financial and Cars
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Cars is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Citizens Financial 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 Citizens Financial Group are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Citizens Financial i.e., Citizens Financial and Cars go up and down completely randomly.
Pair Corralation between Citizens Financial and Cars
Assuming the 90 days horizon Citizens Financial is expected to generate 1.72 times less return on investment than Cars. But when comparing it to its historical volatility, Citizens Financial Group is 1.37 times less risky than Cars. It trades about 0.29 of its potential returns per unit of risk. Cars Inc is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,460 in Cars Inc on September 1, 2024 and sell it today you would earn a total of 400.00 from holding Cars Inc or generate 27.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citizens Financial Group vs. Cars Inc
Performance |
| Timeline |
| Citizens Financial |
| Cars Inc |
Citizens Financial and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Cars
The main advantage of trading using opposite Citizens Financial and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Citizens Financial vs. SBA Communications Corp | Citizens Financial vs. Chunghwa Telecom Co | Citizens Financial vs. Tyson Foods | Citizens Financial vs. Singapore Telecommunications Limited |
| Cars vs. Eastman Chemical | Cars vs. GRIFFIN MINING LTD | Cars vs. Shin Etsu Chemical Co | Cars vs. KINGBOARD CHEMICAL |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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