Correlation Between Citizens Financial and Washington Trust
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Washington Trust 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 Trust 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 Trust Bancorp, you can compare the effects of market volatilities on Citizens Financial and Washington Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Washington Trust.
Diversification Opportunities for Citizens Financial and Washington Trust
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citizens and Washington is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group and Washington Trust Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Trust 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 Washington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Trust Bancorp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Washington Trust go up and down completely randomly.
Pair Corralation between Citizens Financial and Washington Trust
Assuming the 90 days trading horizon Citizens Financial Group is expected to under-perform the Washington Trust. But the preferred stock apears to be less risky and, when comparing its historical volatility, Citizens Financial Group is 3.59 times less risky than Washington Trust. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Washington Trust Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,511 in Washington Trust Bancorp on August 30, 2024 and sell it today you would earn a total of 221.00 from holding Washington Trust Bancorp or generate 6.29% 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. Washington Trust Bancorp
Performance |
| Timeline |
| Citizens Financial |
| Washington Trust Bancorp |
Citizens Financial and Washington Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Washington Trust
The main advantage of trading using opposite Citizens Financial and Washington Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Washington Trust 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 Trust will offset losses from the drop in Washington Trust'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 Trust vs. Univest Pennsylvania | Washington Trust vs. Waterstone Financial | Washington Trust vs. Mid Penn Bancorp | Washington Trust vs. ST Bancorp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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