Correlation Between Citizens Financial and Truist Financial
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and Truist Financial 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 Truist Financial 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 Truist Financial Corp, you can compare the effects of market volatilities on Citizens Financial and Truist Financial 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 Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and Truist Financial.
Diversification Opportunities for Citizens Financial and Truist Financial
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citizens and Truist is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Group, and Truist Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial Corp 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 Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial Corp has no effect on the direction of Citizens Financial i.e., Citizens Financial and Truist Financial go up and down completely randomly.
Pair Corralation between Citizens Financial and Truist Financial
Considering the 90-day investment horizon Citizens Financial Group, is expected to generate 1.19 times more return on investment than Truist Financial. However, Citizens Financial is 1.19 times more volatile than Truist Financial Corp. It trades about 0.13 of its potential returns per unit of risk. Truist Financial Corp is currently generating about 0.12 per unit of risk. If you would invest 2,472 in Citizens Financial Group, on September 1, 2024 and sell it today you would earn a total of 2,342 from holding Citizens Financial Group, or generate 94.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens Financial Group, vs. Truist Financial Corp
Performance |
| Timeline |
| Citizens Financial Group, |
| Truist Financial Corp |
Citizens Financial and Truist Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and Truist Financial
The main advantage of trading using opposite Citizens Financial and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, Truist Financial 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 Truist Financial will offset losses from the drop in Truist Financial's long position.| Citizens Financial vs. PNC Financial Services | Citizens Financial vs. Regions Financial | Citizens Financial vs. Fifth Third Bancorp | Citizens Financial vs. Comerica |
| Truist Financial vs. PNC Financial Services | Truist Financial vs. KeyCorp | Truist Financial vs. Western Alliance Bancorporation | Truist Financial vs. Zions Bancorporation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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