Correlation Between Citizens Financial and Patria Investments
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Patria Investments 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 Patria Investments 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 Patria Investments Limited, you can compare the effects of market volatilities on Citizens Financial and Patria Investments 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 Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Patria Investments.
Diversification Opportunities for Citizens Financial and Patria Investments
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citizens and Patria is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Citizens Financial i.e., Citizens Financial and Patria Investments go up and down completely randomly.
Pair Corralation between Citizens Financial and Patria Investments
Assuming the 90 days trading horizon Citizens Financial Group, is expected to generate 0.78 times more return on investment than Patria Investments. However, Citizens Financial Group, is 1.29 times less risky than Patria Investments. It trades about 0.06 of its potential returns per unit of risk. Patria Investments Limited is currently generating about -0.05 per unit of risk. If you would invest 27,131 in Citizens Financial Group, on November 5, 2024 and sell it today you would earn a total of 504.00 from holding Citizens Financial Group, or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group, vs. Patria Investments Limited
Performance |
| Timeline |
| Citizens Financial Group, |
| Patria Investments |
Citizens Financial and Patria Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Patria Investments
The main advantage of trading using opposite Citizens Financial and Patria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Patria Investments 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 Patria Investments will offset losses from the drop in Patria Investments' long position.| Citizens Financial vs. HDFC Bank Limited | Citizens Financial vs. Ita Unibanco Holding | Citizens Financial vs. Ita Unibanco Holding | Citizens Financial vs. Deutsche Bank Aktiengesellschaft |
| Patria Investments vs. Taiwan Semiconductor Manufacturing | Patria Investments vs. Apple Inc | Patria Investments vs. Alibaba Group Holding | Patria Investments vs. Microsoft |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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