Correlation Between Citizens Financial and National Capital
Can any of the company-specific risk be diversified away by investing in both Citizens Financial and National Capital 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 National Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens Financial Corp and National Capital Bank, you can compare the effects of market volatilities on Citizens Financial and National Capital 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 National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Financial and National Capital.
Diversification Opportunities for Citizens Financial and National Capital
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citizens and National is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Financial Corp and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank 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 Corp are associated (or correlated) with National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of Citizens Financial i.e., Citizens Financial and National Capital go up and down completely randomly.
Pair Corralation between Citizens Financial and National Capital
Given the investment horizon of 90 days Citizens Financial Corp is expected to generate 1.48 times more return on investment than National Capital. However, Citizens Financial is 1.48 times more volatile than National Capital Bank. It trades about 0.05 of its potential returns per unit of risk. National Capital Bank is currently generating about 0.07 per unit of risk. If you would invest 1,704 in Citizens Financial Corp on August 24, 2024 and sell it today you would earn a total of 796.00 from holding Citizens Financial Corp or generate 46.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.42% |
| Values | Daily Returns |
Citizens Financial Corp vs. National Capital Bank
Performance |
| Timeline |
| Citizens Financial Corp |
| National Capital Bank |
Citizens Financial and National Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens Financial and National Capital
The main advantage of trading using opposite Citizens Financial and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens Financial position performs unexpectedly, National Capital 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 National Capital will offset losses from the drop in National Capital's long position.| Citizens Financial vs. Nedbank Group | Citizens Financial vs. Standard Bank Group | Citizens Financial vs. Bank Central Asia | Citizens Financial vs. PSB Holdings |
| National Capital vs. Delhi Bank Corp | National Capital vs. CCSB Financial Corp | National Capital vs. Bank of Utica | National Capital vs. BEO 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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