Correlation Between Citizens Financial and Cadence Bank
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Cadence Bank 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 Cadence Bank 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 Cadence Bank, you can compare the effects of market volatilities on Citizens Financial and Cadence Bank 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 Cadence Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Cadence Bank.
Diversification Opportunities for Citizens Financial and Cadence Bank
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citizens and Cadence is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Cadence Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Bank 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 Cadence Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Bank has no effect on the direction of Citizens Financial i.e., Citizens Financial and Cadence Bank go up and down completely randomly.
Pair Corralation between Citizens Financial and Cadence Bank
Assuming the 90 days trading horizon Citizens Financial Group is expected to generate 1.13 times more return on investment than Cadence Bank. However, Citizens Financial is 1.13 times more volatile than Cadence Bank. It trades about 0.1 of its potential returns per unit of risk. Cadence Bank is currently generating about 0.01 per unit of risk. If you would invest 1,838 in Citizens Financial Group on August 29, 2024 and sell it today you would earn a total of 228.00 from holding Citizens Financial Group or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Cadence Bank
Performance |
| Timeline |
| Citizens Financial |
| Cadence Bank |
Citizens Financial and Cadence Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Cadence Bank
The main advantage of trading using opposite Citizens Financial and Cadence Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Cadence Bank 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 Cadence Bank will offset losses from the drop in Cadence Bank'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 |
| Cadence Bank vs. Bank of Hawaii | Cadence Bank vs. Associated Banc Corp | Cadence Bank vs. Citizens Financial Group | Cadence Bank vs. CullenFrost Bankers |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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