Correlation Between Citizens Financial and Preferred Bank
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Preferred 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 Preferred 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 Preferred Bank, you can compare the effects of market volatilities on Citizens Financial and Preferred 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 Preferred Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Preferred Bank.
Diversification Opportunities for Citizens Financial and Preferred Bank
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and Preferred is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Preferred Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred 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 Preferred Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Bank has no effect on the direction of Citizens Financial i.e., Citizens Financial and Preferred Bank go up and down completely randomly.
Pair Corralation between Citizens Financial and Preferred Bank
Assuming the 90 days trading horizon Citizens Financial is expected to generate 3.25 times less return on investment than Preferred Bank. But when comparing it to its historical volatility, Citizens Financial Group is 2.36 times less risky than Preferred Bank. It trades about 0.08 of its potential returns per unit of risk. Preferred Bank is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,244 in Preferred Bank on August 30, 2024 and sell it today you would earn a total of 2,326 from holding Preferred Bank or generate 32.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Preferred Bank
Performance |
| Timeline |
| Citizens Financial |
| Preferred Bank |
Citizens Financial and Preferred Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Preferred Bank
The main advantage of trading using opposite Citizens Financial and Preferred Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Preferred 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 Preferred Bank will offset losses from the drop in Preferred 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 |
| Preferred Bank vs. Pacific Premier Bancorp | Preferred Bank vs. Heritage Financial | Preferred Bank vs. QCR Holdings | Preferred Bank vs. Lakeland Financial |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |