Correlation Between Citizens Financial and Valley National
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Valley 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 Valley 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 Valley National Bancorp, you can compare the effects of market volatilities on Citizens Financial and Valley 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 Valley National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Valley National.
Diversification Opportunities for Citizens Financial and Valley National
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citizens and Valley is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Valley National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valley National Bancorp 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 Valley National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valley National Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Valley National go up and down completely randomly.
Pair Corralation between Citizens Financial and Valley National
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Valley National. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 2.64 times less risky than Valley National. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Valley National Bancorp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 969.00 in Valley National Bancorp on August 31, 2024 and sell it today you would earn a total of 99.00 from holding Valley National Bancorp or generate 10.22% 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. Valley National Bancorp
Performance |
| Timeline |
| Citizens Financial |
| Valley National Bancorp |
Citizens Financial and Valley National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Valley National
The main advantage of trading using opposite Citizens Financial and Valley National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Valley 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 Valley National will offset losses from the drop in Valley 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 |
| Valley National vs. Fulton Financial | Valley National vs. Webster Financial | Valley National vs. United Bankshares | Valley National vs. FNB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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