Correlation Between Citizens Financial and Provident Financial
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Provident 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 Provident 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 Provident Financial Holdings, you can compare the effects of market volatilities on Citizens Financial and Provident 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 Provident Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Provident Financial.
Diversification Opportunities for Citizens Financial and Provident Financial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citizens and Provident is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Provident Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident 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 Provident Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Financial has no effect on the direction of Citizens Financial i.e., Citizens Financial and Provident Financial go up and down completely randomly.
Pair Corralation between Citizens Financial and Provident Financial
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Provident Financial. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 1.13 times less risky than Provident Financial. The preferred stock trades about -0.13 of its potential returns per unit of risk. The Provident Financial Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,574 in Provident Financial Holdings on November 28, 2024 and sell it today you would earn a total of 1.00 from holding Provident Financial Holdings or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Provident Financial Holdings
Performance |
| Timeline |
| Citizens Financial |
| Provident Financial |
Citizens Financial and Provident Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Provident Financial
The main advantage of trading using opposite Citizens Financial and Provident Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Provident 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 Provident Financial will offset losses from the drop in Provident 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 |
| Provident Financial vs. Home Federal Bancorp | Provident Financial vs. Magyar Bancorp | Provident Financial vs. Community West Bancshares | Provident Financial vs. First Northwest Bancorp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |