Correlation Between Citizens Financial and Park National
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Park National 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 Park National 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 Park National, you can compare the effects of market volatilities on Citizens Financial and Park National 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 Park National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Park National.
Diversification Opportunities for Citizens Financial and Park National
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and Park is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Park National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park National 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 Park National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park National has no effect on the direction of Citizens Financial i.e., Citizens Financial and Park National go up and down completely randomly.
Pair Corralation between Citizens Financial and Park National
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Park National. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 4.21 times less risky than Park National. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Park National is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 17,494 in Park National on August 31, 2024 and sell it today you would earn a total of 1,724 from holding Park National or generate 9.85% 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. Park National
Performance |
| Timeline |
| Citizens Financial |
| Park National |
Citizens Financial and Park National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Park National
The main advantage of trading using opposite Citizens Financial and Park National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Park National 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 Park National will offset losses from the drop in Park National'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 |
| Park National vs. Peoples Bancorp | Park National vs. Lakeland Financial | Park National vs. NBT Bancorp | Park National vs. Trustmark |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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