Correlation Between Citizens Financial and BOK Financial
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and BOK Financial 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 BOK Financial 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 BOK Financial, you can compare the effects of market volatilities on Citizens Financial and BOK Financial 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 BOK Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and BOK Financial.
Diversification Opportunities for Citizens Financial and BOK Financial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citizens and BOK is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and BOK Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOK Financial 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 BOK Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOK Financial has no effect on the direction of Citizens Financial i.e., Citizens Financial and BOK Financial go up and down completely randomly.
Pair Corralation between Citizens Financial and BOK Financial
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the BOK Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 2.85 times less risky than BOK Financial. The preferred stock trades about -0.15 of its potential returns per unit of risk. The BOK Financial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 10,780 in BOK Financial on August 28, 2024 and sell it today you would earn a total of 1,187 from holding BOK Financial or generate 11.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. BOK Financial
Performance |
| Timeline |
| Citizens Financial |
| BOK Financial |
Citizens Financial and BOK Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and BOK Financial
The main advantage of trading using opposite Citizens Financial and BOK Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, BOK Financial 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 BOK Financial will offset losses from the drop in BOK Financial's long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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