Correlation Between Citizens Financial and NVIDIA
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and NVIDIA 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 NVIDIA 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 NVIDIA, you can compare the effects of market volatilities on Citizens Financial and NVIDIA 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 NVIDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and NVIDIA.
Diversification Opportunities for Citizens Financial and NVIDIA
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and NVIDIA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Citizens Financial i.e., Citizens Financial and NVIDIA go up and down completely randomly.
Pair Corralation between Citizens Financial and NVIDIA
Assuming the 90 days trading horizon Citizens Financial is expected to generate 30.62 times less return on investment than NVIDIA. But when comparing it to its historical volatility, Citizens Financial Group, is 40.28 times less risky than NVIDIA. It trades about 0.11 of its potential returns per unit of risk. NVIDIA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 489.00 in NVIDIA on October 30, 2024 and sell it today you would earn a total of 972.00 from holding NVIDIA or generate 198.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.89% |
| Values | Daily Returns |
Citizens Financial Group, vs. NVIDIA
Performance |
| Timeline |
| Citizens Financial Group, |
| NVIDIA |
Citizens Financial and NVIDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and NVIDIA
The main advantage of trading using opposite Citizens Financial and NVIDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, NVIDIA 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 NVIDIA will offset losses from the drop in NVIDIA's long position.| Citizens Financial vs. PENN Entertainment, | Citizens Financial vs. MAHLE Metal Leve | Citizens Financial vs. Guidewire Software, | Citizens Financial vs. Academy Sports and |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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