Correlation Between Citizens Financial and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Citizens Financial and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Dow Jones.
Diversification Opportunities for Citizens Financial and Dow Jones
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Dow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Citizens Financial i.e., Citizens Financial and Dow Jones go up and down completely randomly.
Pair Corralation between Citizens Financial and Dow Jones
Assuming the 90 days horizon Citizens Financial Group is expected to generate 2.42 times more return on investment than Dow Jones. However, Citizens Financial is 2.42 times more volatile than Dow Jones Industrial. It trades about 0.32 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.21 per unit of risk. If you would invest 3,794 in Citizens Financial Group on August 25, 2024 and sell it today you would earn a total of 649.00 from holding Citizens Financial Group or generate 17.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Dow Jones Industrial
Performance |
| Timeline |
Citizens Financial and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Citizens Financial Group
Pair trading matchups for Citizens Financial
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Citizens Financial and Dow Jones
The main advantage of trading using opposite Citizens Financial and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Citizens Financial vs. Insteel Industries | Citizens Financial vs. CECO ENVIRONMENTAL | Citizens Financial vs. Micron Technology | Citizens Financial vs. ALGOMA STEEL GROUP |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |