Correlation Between Citizens Financial and Southern States
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Southern States 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 Southern States 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 Southern States Bancshares, you can compare the effects of market volatilities on Citizens Financial and Southern States 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 Southern States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Southern States.
Diversification Opportunities for Citizens Financial and Southern States
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and Southern is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Southern States Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern States Banc 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 Southern States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern States Banc has no effect on the direction of Citizens Financial i.e., Citizens Financial and Southern States go up and down completely randomly.
Pair Corralation between Citizens Financial and Southern States
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Southern States. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 3.82 times less risky than Southern States. The preferred stock trades about -0.21 of its potential returns per unit of risk. The Southern States Bancshares is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,215 in Southern States Bancshares on August 29, 2024 and sell it today you would earn a total of 527.00 from holding Southern States Bancshares or generate 16.39% 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. Southern States Bancshares
Performance |
| Timeline |
| Citizens Financial |
| Southern States Banc |
Citizens Financial and Southern States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Southern States
The main advantage of trading using opposite Citizens Financial and Southern States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Southern States 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 Southern States will offset losses from the drop in Southern States' long position.| Citizens Financial vs. Capital One Financial | Citizens Financial vs. Capital One Financial | Citizens Financial vs. Bank of America |
| Southern States vs. Home Federal Bancorp | Southern States vs. Oak Valley Bancorp | Southern States vs. Mainstreet Bank | Southern States vs. Chemung Financial Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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