Correlation Between Citizens Financial and Bank First
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Bank First 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 Bank First 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 Bank First National, you can compare the effects of market volatilities on Citizens Financial and Bank First 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 Bank First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Bank First.
Diversification Opportunities for Citizens Financial and Bank First
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citizens and Bank is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National 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 Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Citizens Financial i.e., Citizens Financial and Bank First go up and down completely randomly.
Pair Corralation between Citizens Financial and Bank First
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Bank First. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 3.79 times less risky than Bank First. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Bank First National is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 9,173 in Bank First National on August 25, 2024 and sell it today you would earn a total of 1,288 from holding Bank First National or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Bank First National
Performance |
| Timeline |
| Citizens Financial |
| Bank First National |
Citizens Financial and Bank First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Bank First
The main advantage of trading using opposite Citizens Financial and Bank First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Bank First 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 Bank First will offset losses from the drop in Bank First's long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America | Citizens Financial vs. KeyCorp |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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