Correlation Between Citizens Financial and NIKE
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and NIKE 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 NIKE 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 NIKE Inc, you can compare the effects of market volatilities on Citizens Financial and NIKE 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 NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and NIKE.
Diversification Opportunities for Citizens Financial and NIKE
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citizens and NIKE is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE 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 NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc has no effect on the direction of Citizens Financial i.e., Citizens Financial and NIKE go up and down completely randomly.
Pair Corralation between Citizens Financial and NIKE
Assuming the 90 days trading horizon Citizens Financial Group, is expected to generate 1.44 times more return on investment than NIKE. However, Citizens Financial is 1.44 times more volatile than NIKE Inc. It trades about 0.03 of its potential returns per unit of risk. NIKE Inc is currently generating about -0.43 per unit of risk. If you would invest 27,587 in Citizens Financial Group, on October 19, 2024 and sell it today you would earn a total of 228.00 from holding Citizens Financial Group, or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group, vs. NIKE Inc
Performance |
| Timeline |
| Citizens Financial Group, |
| NIKE Inc |
Citizens Financial and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and NIKE
The main advantage of trading using opposite Citizens Financial and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, NIKE 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 NIKE will offset losses from the drop in NIKE's long position.| Citizens Financial vs. Hormel Foods | Citizens Financial vs. United Natural Foods, | Citizens Financial vs. Alaska Air Group, | Citizens Financial vs. Verizon Communications |
| NIKE vs. Citizens Financial Group, | NIKE vs. Jefferies Financial Group | NIKE vs. Truist Financial | NIKE vs. Prudential Financial |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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