Correlation Between Citizens Financial and Enterprise Financial
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Enterprise 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 Enterprise 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 Enterprise Financial Services, you can compare the effects of market volatilities on Citizens Financial and Enterprise 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 Enterprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Enterprise Financial.
Diversification Opportunities for Citizens Financial and Enterprise Financial
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and Enterprise is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Enterprise Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise 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 Enterprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise Financial has no effect on the direction of Citizens Financial i.e., Citizens Financial and Enterprise Financial go up and down completely randomly.
Pair Corralation between Citizens Financial and Enterprise Financial
Assuming the 90 days trading horizon Citizens Financial is expected to generate 1.63 times less return on investment than Enterprise Financial. But when comparing it to its historical volatility, Citizens Financial Group is 1.16 times less risky than Enterprise Financial. It trades about 0.03 of its potential returns per unit of risk. Enterprise Financial Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,643 in Enterprise Financial Services on August 27, 2024 and sell it today you would earn a total of 1,431 from holding Enterprise Financial Services or generate 30.82% 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. Enterprise Financial Services
Performance |
| Timeline |
| Citizens Financial |
| Enterprise Financial |
Citizens Financial and Enterprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Enterprise Financial
The main advantage of trading using opposite Citizens Financial and Enterprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Enterprise 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 Enterprise Financial will offset losses from the drop in Enterprise Financial's long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America |
| Enterprise Financial vs. Fifth Third Bancorp | Enterprise Financial vs. Zions Bancorporation | Enterprise Financial vs. Huntington Bancshares Incorporated | Enterprise Financial vs. PNC Financial Services |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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