Correlation Between Citizens Financial and First United
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and First United 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 First United 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 First United, you can compare the effects of market volatilities on Citizens Financial and First United 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 First United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and First United.
Diversification Opportunities for Citizens Financial and First United
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citizens and First is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and First United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First United 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 First United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First United has no effect on the direction of Citizens Financial i.e., Citizens Financial and First United go up and down completely randomly.
Pair Corralation between Citizens Financial and First United
Assuming the 90 days trading horizon Citizens Financial is expected to generate 5.24 times less return on investment than First United. But when comparing it to its historical volatility, Citizens Financial Group, is 3.22 times less risky than First United. It trades about 0.17 of its potential returns per unit of risk. First United is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,860 in First United on August 29, 2024 and sell it today you would earn a total of 693.00 from holding First United or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group, vs. First United
Performance |
| Timeline |
| Citizens Financial Group, |
| First United |
Citizens Financial and First United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and First United
The main advantage of trading using opposite Citizens Financial and First United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, First United 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 First United will offset losses from the drop in First United's long position.| Citizens Financial vs. Axos Financial | Citizens Financial vs. Byline Bancorp | Citizens Financial vs. KB Financial Group | Citizens Financial vs. Nu Holdings |
| First United vs. First Community | First United vs. Greene County Bancorp | First United vs. Community West Bancshares | First United vs. Affinity Bancshares |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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