Correlation Between Citizens Financial and CNB Financial
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and CNB 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 CNB 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 CNB Financial, you can compare the effects of market volatilities on Citizens Financial and CNB 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 CNB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and CNB Financial.
Diversification Opportunities for Citizens Financial and CNB Financial
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citizens and CNB is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and CNB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB 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 CNB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Financial has no effect on the direction of Citizens Financial i.e., Citizens Financial and CNB Financial go up and down completely randomly.
Pair Corralation between Citizens Financial and CNB Financial
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the CNB Financial. In addition to that, Citizens Financial is 1.29 times more volatile than CNB Financial. It trades about -0.2 of its total potential returns per unit of risk. CNB Financial is currently generating about 0.23 per unit of volatility. If you would invest 2,397 in CNB Financial on August 31, 2024 and sell it today you would earn a total of 98.00 from holding CNB Financial or generate 4.09% 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. CNB Financial
Performance |
| Timeline |
| Citizens Financial |
| CNB Financial |
Citizens Financial and CNB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and CNB Financial
The main advantage of trading using opposite Citizens Financial and CNB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, CNB 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 CNB Financial will offset losses from the drop in CNB Financial'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 |
| CNB Financial vs. KeyCorp | CNB Financial vs. KeyCorp | CNB Financial vs. Fifth Third Bancorp | CNB Financial vs. Citizens Financial Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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