Correlation Between Citizens Financial and Washington Federal
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Washington Federal 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 Washington Federal 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 Washington Federal, you can compare the effects of market volatilities on Citizens Financial and Washington Federal 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 Washington Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Washington Federal.
Diversification Opportunities for Citizens Financial and Washington Federal
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and Washington is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Washington Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Federal 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 Washington Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Federal has no effect on the direction of Citizens Financial i.e., Citizens Financial and Washington Federal go up and down completely randomly.
Pair Corralation between Citizens Financial and Washington Federal
Assuming the 90 days trading horizon Citizens Financial is expected to generate 1.46 times less return on investment than Washington Federal. But when comparing it to its historical volatility, Citizens Financial Group is 1.2 times less risky than Washington Federal. It trades about 0.1 of its potential returns per unit of risk. Washington Federal is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,504 in Washington Federal on August 31, 2024 and sell it today you would earn a total of 299.00 from holding Washington Federal or generate 19.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group vs. Washington Federal
Performance |
| Timeline |
| Citizens Financial |
| Washington Federal |
Citizens Financial and Washington Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Washington Federal
The main advantage of trading using opposite Citizens Financial and Washington Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Washington Federal 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 Washington Federal will offset losses from the drop in Washington Federal'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 |
| Washington Federal vs. KeyCorp | Washington Federal vs. KeyCorp | Washington Federal vs. Fifth Third Bancorp | Washington Federal vs. Citizens Financial Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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