Correlation Between Citizens Financial and Regions Financial
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Regions 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 Regions 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 Regions Financial, you can compare the effects of market volatilities on Citizens Financial and Regions 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 Regions Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Regions Financial.
Diversification Opportunities for Citizens Financial and Regions Financial
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citizens and Regions is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of Citizens Financial i.e., Citizens Financial and Regions Financial go up and down completely randomly.
Pair Corralation between Citizens Financial and Regions Financial
Assuming the 90 days trading horizon Citizens Financial is expected to generate 1.22 times less return on investment than Regions Financial. In addition to that, Citizens Financial is 1.06 times more volatile than Regions Financial. It trades about 0.09 of its total potential returns per unit of risk. Regions Financial is currently generating about 0.11 per unit of volatility. If you would invest 1,709 in Regions Financial on August 24, 2024 and sell it today you would earn a total of 226.00 from holding Regions Financial or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Regions Financial
Performance |
| Timeline |
| Citizens Financial |
| Regions Financial |
Citizens Financial and Regions Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Regions Financial
The main advantage of trading using opposite Citizens Financial and Regions Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Regions 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 Regions Financial will offset losses from the drop in Regions 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 |
| Regions Financial vs. Truist Financial | Regions Financial vs. US Bancorp | Regions Financial vs. Truist Financial | Regions Financial vs. MetLife Preferred Stock |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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