Correlation Between Citizens Financial and United Community
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and United Community 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 United Community 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 United Community Banks,, you can compare the effects of market volatilities on Citizens Financial and United Community 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 United Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and United Community.
Diversification Opportunities for Citizens Financial and United Community
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and United is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and United Community Banks, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Community Banks, 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 United Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Community Banks, has no effect on the direction of Citizens Financial i.e., Citizens Financial and United Community go up and down completely randomly.
Pair Corralation between Citizens Financial and United Community
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the United Community. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 3.24 times less risky than United Community. The preferred stock trades about -0.21 of its potential returns per unit of risk. The United Community Banks, is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,858 in United Community Banks, on August 29, 2024 and sell it today you would earn a total of 581.00 from holding United Community Banks, or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. United Community Banks,
Performance |
| Timeline |
| Citizens Financial |
| United Community Banks, |
Citizens Financial and United Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and United Community
The main advantage of trading using opposite Citizens Financial and United Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, United Community 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 United Community will offset losses from the drop in United Community'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 |
| United Community vs. Alliant Energy Corp | United Community vs. PGE Corp | United Community vs. Reservoir Media | United Community vs. Transportadora de Gas |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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