Correlation Between Citizens Financial and Phillips
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Phillips 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 Phillips 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 Phillips 66, you can compare the effects of market volatilities on Citizens Financial and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Phillips.
Diversification Opportunities for Citizens Financial and Phillips
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citizens and Phillips is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Citizens Financial i.e., Citizens Financial and Phillips go up and down completely randomly.
Pair Corralation between Citizens Financial and Phillips
Assuming the 90 days trading horizon Citizens Financial Group, is expected to generate 1.64 times more return on investment than Phillips. However, Citizens Financial is 1.64 times more volatile than Phillips 66. It trades about 0.13 of its potential returns per unit of risk. Phillips 66 is currently generating about 0.0 per unit of risk. If you would invest 16,032 in Citizens Financial Group, on October 25, 2024 and sell it today you would earn a total of 12,038 from holding Citizens Financial Group, or generate 75.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 92.2% |
Values | Daily Returns |
Citizens Financial Group, vs. Phillips 66
Performance |
Timeline |
Citizens Financial Group, |
Phillips 66 |
Citizens Financial and Phillips Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citizens Financial and Phillips
The main advantage of trading using opposite Citizens Financial and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Phillips 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 Phillips will offset losses from the drop in Phillips' long position.Citizens Financial vs. Jefferies Financial Group | Citizens Financial vs. Warner Music Group | Citizens Financial vs. Synchrony Financial | Citizens Financial vs. SVB Financial Group |
Phillips vs. Cardinal Health, | Phillips vs. Unity Software | Phillips vs. Guidewire Software, | Phillips vs. Spotify Technology SA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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